- Nonfarm payrolls rose by 245k in November, below market expectations. The unemployment rate edged down to 6.7% from 6.9% in October.
- In the payrolls data, notable jobs gains were seen in transportation and warehousing (+145k), professional and business services (+60k), and health care (+46k). But perhaps most telling given the rise in restrictions across the country, there were losses at bars and restaurants (-17.4k), which held the leisure and hospitality sector to a 31k increase in jobs.
- The goods sector saw decent hiring with jobs in construction and manufacturing both up 27k.
- Government employment declined for the third consecutive month (-99k), held back by the continued loss of temporary census jobs (-93k). State and local employment was flat.
- Unfortunately, the drop in unemployment was not good news. Employment actually fell (-74k) in the household survey, but an even greater 400k people left the labor force. The labor force participation rate fell to 61.5% in November, from 61.7% in October. The number of people out of the labor force who currently want a job rose 448k to 7.1 million, 2.2 million more than in February 2020. These individuals were not counted as unemployed because they were not actively looking for work during the last four weeks or were unavailable to take a job.
- In a sign of the increased restrictions in many parts of the country, the number of people who teleworked rose to 21.8% in November from 21.2% in October.
Key Implications
- It is a relief that payrolls grew despite increased restrictions across much of the country. However, job losses in the household survey, and weakness in certain industries show that the surge in infections is taking a toll. It is not unprecedented for the household and establishment surveys to tell different stories on a monthly basis, and employment swings in the household survey are generally larger. Looking at trends on a year-on-year basis, household and establishment numbers are fairly similar, with jobs down 5.6% and 6.1% respectively.
- These are not the kind of job gains that are needed to regain the 9.8 million jobs lost since February. If gains continue at this rate, it will take over three years to make up for lost ground during the pandemic. Thankfully, there is light at the end of the tunnel on the vaccine front, but it will take some time to achieve widespread vaccination. In the meantime, many households and business are struggling, which is why we are laser-focused on the negotiations in Washington on a fiscal relief package.
- Congress needs to pass a spending bill to fund government by Dec 11th, and progress is being made on attaching another Covid-19 relief bill to the legislation. This would go along way to preventing permanent damage (bankruptcies and defaults for example) until the pandemic is contained and close contact activities can resume.
