WASHINGTON — An unexpected dip in the jobless rate to 10 percent led several better-than-expected November employment numbers reported Friday, yet while all bode well for the U.S. economic recovery, significant hurdles remain.
Employers shed 11,000 jobs in November, the Bureau of Labor Statistics reported. Thats the lowest level since December 2007, when the recession started and also the last month that the U.S. economy recorded job gains.
The BLS also used more complete data to revise initial October and September job reports to show 159,000 fewer lost jobs combined than first had been reported. The unemployment rate fell in November, from 10.2 percent to 10 percent.
In addition, average hours worked ticked up by two-tenths of a percentage point, showing that workers are getting more hours on the job. A broader measure of employment, which includes people who are working part time when they want full-time jobs and those who've stopped looking for jobs but want to work, also showed significant improvement. This measure of underutilization of the labor force fell from 17.5 percent to 17.2 percent.
It all points to an economy that's slowly gathering steam.
The initial jobless claims data for the last two weeks had led us to talk about being closer to the point of net job creation than we had previously thought, forecaster RDQ Economics in New York said in a note to investors.
Combine Novembers few job losses with the sharp revisions to the earlier months numbers and it is beginning to look like December could be the first month to show a positive payroll print, RDQ said. Mainstream economists had projected that another 150,000 jobs would be lost in November, so the strong improvement was a pleasant surprise. Octobers initial report had shown joblessness spiking by a sharp 0.4 percentage point.
This months job report was as good as last months was bad. The reality is probably somewhere in between. That is, the job market is extraordinarily weak and still getting weaker, but moving in the right direction, said Mark Zandi, the chief economist of forecaster Moodys Economy.com in West Chester, Pa.
Unexpectedly strong hiring in the category of business and professional services, which added 86,000 jobs, powered Novembers improvement.
Temporary help services accounted for the majority of the increase, adding 52,000 jobs. Since July, temporary help services employment has risen by 117,000, the BLS report said.
The temp hiring number was the largest jump in five years, analysts said. The trend is important. Temporary hiring is a harbinger of broader employment, since companies first bring in temp workers to gauge whether economic conditions warrant a return to full-time hiring, which increases their costs for health care and other obligations.
Other positive sectors included health services, which improved by a solid 40,000 positions, and government hiring, which increased by 7,000 positions.
The report cannot be dismissed as the result of seasonal quirks, Nigel Gault, the chief U.S. economist for forecaster IHS Global Insight, said in a note to investors. Its mostly genuine good news
A day after hosting a White House jobs summit, President Barack Obama traveled to Allentown, Pa., on Friday to talk up his efforts to create jobs. He called the new report "good news just in time for the season of hope," and suggested that his administrations policies deserve part of the credit. He promised to roll out some new initiatives for job creation Tuesday.
Fridays report is by far the closest we have been to stable employment since the recession began almost two years ago, Christina Romer, the chair of Obamas Council of Economic Advisers, said in a statement.
Even so, she acknowledged, there are many bumps in the road ahead. But it is clear we are moving in the right direction.
One sobering note: The work force declined by 98,000 in November, and most analysts expect the jobless rate to keep rising in the months ahead. The number of long-term unemployed, those out of work six months or more, rose to 5.9 million.
The leading indicators in the report — including more temp jobs, the increase in hours worked and the gain in household employment — are all pointing to a stable job market by early next year, Zandi said. However, there are still more job losses to go over the next several months, and unemployment will rise into next summer.
"The labor force continues to contract, which is very unusual, and will ultimately begin to rise as discouraged workers step back in and those with severance and (unemployment) benefits begin to run out of funds and need to resume looking for work.
The challenge ahead is for growth to be strong enough to make a significant dent in the 7.2 million jobs that have been lost since the recession began and the 15.4 million unemployed nationwide. Minutes from the Federal Reserves November board meeting show that the Fed forecasts that the jobless rate will be somewhere from 9.3 percent to 9.7 percent next December, and 8 percent or higher throughout 2011.
NOVEMBER EMPLOYMENT BY SECTOR:
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