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Employment Recovery Stumbles in November

Employment Recovery Stumbles in November

Monthly job gains were a disappointment in November, coming in below 2021 norms and well behind the figure economists expected.

The initial estimate from the Bureau of Labor Statistics (BLS) for jobs gained in the month of November was just 210,000, far below economists’ expectations of more than half a million. That was the weakest monthly gain of the year after the preliminary September figure of 194,000 jobs gained (revised up to 379,000 jobs in the latest report). Coupled with October’s upward revision of 15,000 more jobs, the previous two months were 82,000 jobs higher than initial estimates. Perhaps the revisions to November’s estimate will be better too.

Total private employment was up 235,000 jobs, primarily in the service-providing sectors (+175,000 jobs) as Government employment again declined, this time by 25,000 jobs, almost all of it in state and local education. Goods-producing employment (Mining, Construction and Manufacturing) added 60,000 jobs in November, about evenly split between Construction and Manufacturing.

Despite the modest employment gain, the headline or U3 unemployment rate fell to 4.2% from 4.6% in October. However, part of that decrease is likely due to fewer workers in the unemployed tally that are actively seeking work. The decrease in persons out of the labor force for various reasons of about 470,000 (in other words, rejoining the work force) was smaller than the decrease in officially unemployed of about 540,000.

The unemployment rate for 16-19-year-olds fell from 11.9% in October to 11.2% in November with virtually no change in the participation rate (36.4%) or civilian labor force for teens (5.99 million). Working aged men (20+) saw unemployment fall 30 basis points (bps) to 4% while the rate for working aged women fell 40 bps to also land at 4%. Both are more than 220 bps lower than one year ago.

With the aforementioned decrease in the number of unemployed of about 540,000, the labor force participation rate ticked up 20 bps to 61.8% and the employment-population ratio jumped 40 bps to 59.2%. Over the year, the employment-population ratio has improved almost two full points while the participation rate has remained stubbornly stuck below 62%. Initial jobless claims have fallen to their lowest level in decades (222,000 at the end of November) as employers struggle to hold onto workers and the surge in employees quitting for other positions or to work for themselves is at an all-time high.

The annual change in average hourly earnings of $1.42 (to $31.03) was 4.8% greater than last November’s rate and the second consecutive month above $1.40. However, the CPI index including food and energy rose 6.2% in October. Industry wage growth varied greatly with Leisure and Hospitality wages jumping 12.3% for the year, while Information employees registered a 0.3% annual increase. Transportation and warehousing workers enjoyed a 6.8% annual increase in hourly wages, but most other industries averaged a 4.5% increase.

Several industries reported unadjusted unemployment rates slightly higher than the month before with Transportation and Construction up by 70 bps and Information up 60 bps. The remainder were flat or down by about 40 bps. Despite reporting continued job losses in November (seasonally adjusted), the Government sector had one of the lowest industry unemployment rates at 1.9%, just behind the Financial Services industry at 2%.

The percentage of workers that telework decreased only slightly to 11.3% in November from 11.6% in October, according to the BLS’s supplemental data measuring the effects of the coronavirus pandemic on the labor market. The rate of telecommuting will likely remain elevated over the next six to 12 months and will undoubtedly remain above pre-pandemic levels going forward as employers balance productivity and teamwork issues with employee satisfaction and competitiveness.

In other November BLS data, the number of people leaving or quitting their job increased from 840,000 in October to 847,000 in November. The number of unemployed for 27 weeks or longer dropped from 2.33 million in October to 2.19 million in November with the expiration of enhanced unemployment benefits. The number of those working part-time that want full-time work fell by 137,000 from last month to about 4.28 million, while the number of workers who prefer part-time positions decreased by 131,000 to about 20.5 million.

Workers marginally attached to the labor force fell by about 470,000 from last November to 1.6 million and the number of discouraged workers stood at 471,000, down 203,000. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate they want and are available for a job and have looked for work sometime in the past 12 months.

The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, fell to 7.8% in November compared to 8.3% last month and 12% in November 2020.

Industry Focus

Professional and Business Services dominated the modest job gain total for November, accounting for almost 43% of all jobs gained for the month. Significant contributions came from the Trade, Transportation and Utilities, Construction, Manufacturing, and Leisure and Hospitality industries. As with last month, Government employment recorded a large seasonally adjusted monthly loss (primarily in state and local education), while Mining and Logging and Information had small losses.

 

  • The Professional and Business Services industry gained 90,000 jobs in November with almost half of them in the high-paying professional and technical services sector (+43,800). The management and technical consulting services subsector accounted for 12,000 of those jobs. The administrative and waste services sector added 41,600 jobs, primarily in employment services (+23,700) and services to buildings and dwellings (+10,400).
  • Transportation and warehousing added 49,700 jobs in November with more than half in couriers and messengers (+26,800) but retail trade losses brought the Trade, Transportation and Utilities industry gain down to 37,000 jobs. The 20,400-job loss in retail trade was entirely in general merchandise stores, while wholesale trade added 8,000 jobs for the month.
  • The Manufacturing industry’s gain of 31,000 jobs in November was almost evenly split between durable goods (+15,000) and nondurable goods (+16,000). Solid contributions were made in the fabricated metal products (+7,900), miscellaneous durable goods (+10,000), food manufacturing (+7,400) and miscellaneous nondurable goods (+3,500) subsectors.
  • The Construction industry also gained 31,000 jobs for the month with a strong gain of 13,000 jobs in specialty trade contractors, almost evenly divided between residential and nonresidential. The construction of buildings subsector added 10,000 jobs while the heavy and civil engineering construction subsector gained 8,100 jobs.
  • The Leisure and Hospitality industry’s monthly gain of 23,000 jobs was largely in accommodation and food services (+17,600), particularly food services and drinking places (+11,000). The arts, entertainment, and recreation subsector added 5,100 jobs for the month as well.
  • The Financial Activities industry added 13,000 jobs in November as solid gains in finance and insurance (+9,300) were dominated by the securities, commodity contracts, investments and funds and trusts subsectors (+8,800). Real estate and rental leasing added 3,400 jobs to the total.
  • The Other Services sector had a solid gain of 10,000 jobs in November with an increase of 10,100 jobs in repair and maintenance. A loss of 5,000 jobs in personal and laundry services more than offset a gain of 4,700 jobs in membership associations and organizations.
  • The Education and Health Services industry’s monthly gain of just 4,000 jobs was largely due to strong hiring in the ambulatory health care subsector (+17,000) canceled by losses in nursing and residential care services (-11,000). Educational services lost 2,300 jobs for the month while social assistance added 3,600 jobs.
  • The Information industry lost 2,000 jobs for the month with cutbacks in hiring for the motion picture and sound recording (-3,400) and telecommunications (-2,700) subsectors cancelling the 4,100 jobs gained in the other information services subsector.
  • The Mining and Logging industry also lost 2,000 jobs in November, led by the oil and gas extraction subsector (-1.200). The support activities for mining subsector lost about 500 jobs for the month.
  • Government education employment cutbacks continued to drag down the overall Government sector for a monthly loss of 25,000 jobs. Local (-12,600) and state (-6,100) government education losses overwhelmed a mild gain of 2,000 jobs at the Federal level – mostly the U.S. Postal Service (+4,700).