Hiring in November Surprises, Pushes Unemployment Back to 50-Year Low

Job gains in November were much higher than economists’ expectations. According to the Bureau of Labor Statistics, the U.S. economy added 266,000 jobs in November, a number that shattered projected gains of roughly 180,000 jobs. The national unemployment rate fell back to 3.5%, returning to the 50-year low it attained earlier this year. Certainly, some of this strong job growth was attributable to auto workers returning to the assembly lines, but several other industries showed strong gains as well.

The monthly positive gain streak continued to 110 consecutive months. Over just the previous three months, monthly job growth has averaged at 205,000 units. The average from January through November 2019 was about 179,700 jobs. The 12-month average for monthly job gains since November 2018 was 184,600 jobs per month. Still, these average monthly employment gains remain below the levels seen from 2014 to 2018, when almost 215,000 jobs were added monthly.

Average hourly earnings growth for all employees was 3.1% in November and has stubbornly stayed in the 3.0% to 3.2% range for all of 2019. The monthly wage figure increased $0.07 between October and November, and was up $0.86 from November 2018, to $28.29.

A little more than 2.2 million jobs were added in the 12 months ending in November 2019, with that figure coming in behind the 2.6 million jobs added in the same period ending in November 2018. This annual growth expanded the job base by 1.5%, the rate it has averaged since June 2019 and slightly below the average annual growth rate for the preceding 12 months (1.6%). Still, that growth rate is 30 basis points (bps) below the growth rate from November 2018 (1.8%). Revisions to the previous two months’ numbers resulted in 41,000 more jobs than initially reported as September’s job gain figure was revised from 180,000 to 193,000 jobs, and October’s gains were revised from 128,000 to 156,000 positions.

The civilian labor force (CLF) participation rate has been improving slightly in the past few months and was 63.2% in November, essentially in line with the average of 63.1% from the past year. The employment-population ratio of 61% was unchanged for the past three months but up 40 bps from November 2018. The total number of unemployed (5.811 million) is down about 208,000 from last year, and the number of people not in the labor force who currently want a job has fallen from 5.4 million last November to 4.8 million currently. Compared to last month, the number of unemployed decreased by 44,000, causing the unemployment rate to dip slightly as the labor force absorbs job seekers.

The number of job leavers decreased by 72,000 people from October to 777,000 but was up by 80,000 people from last year, as the proportion of unemployed due to leaving jobs fell back to 13.3% from 14.5% of all unemployed persons. Job leavers are workers who quit or voluntarily leave their previous job and immediately began looking for new employment. The number of part-time workers for economic reasons (4.32 million in November) fell by 459,000 from November 2018, and the number of part-time workers for non-economic reasons increased by 625,000 to 21.5 million. The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, fell 10 bps to 6.9% from October, the first time it has been below 7% since December 2000.

The number of long-term unemployed workers (out of work for 27 weeks or more) fell by 35,000 from November 2018 to 1.22 million, and the average duration of unemployment fell to 20.2 weeks from 21.7 last year. The number of multiple jobholders increased by 345,000 people year-over-year to 8.28 million. Meanwhile, the number of discouraged workers not in the workforce (325,000) dropped by 128,000 from one year ago.

Industry Focus

Monthly job gains by industry for November were solid almost across the board, with only Mining & Logging and Construction underperforming. The strongest gains were in the Education and Health Services (+74,000), Manufacturing (+54,000) and Leisure and Hospitality (+45,000) industries.

• The Education and Health Services industry’s 74,000 job gain in November was buoyed by strong gains in the health care sector (+45,200 jobs), particularly the subsector of ambulatory health care services (+33,900 positions). The educational services sector added 13,600 jobs to the total while social assistance added another 15,000 jobs.

• The Manufacturing industry rebounded from the General Motors strike, with most of its 54,000 jobs gained in the motor vehicles and parts subsector (+41,300 positions). However, nondurable goods manufacturing added 10,000 jobs for the month, primarily in food manufacturing (+6,200 positions).

• The Leisure and Hospitality industry prepared for the seasonal rush by adding 25,300 jobs in the food services and drinking places subsector. The amusements, gambling, and recreation subsector contributed another 15,700 positions to the industry’s 45,000-job gain for the month.

• The Professional and Business Services industry gained 38,000 jobs in November, primarily in the higher-paying professional and technical services sector (+30,600 positions). The administrative and waste services sector’s gain of 8,300 jobs was hampered by a contraction in services to buildings and dwellings (-8,500 jobs).

• Wholesale trade (-4,300) and retail trade (+2,000) were negligible contributors to the Trade, Transportation and Utilities supersector’s 14,000 new jobs total as transportation and warehousing added a solid 15,500 jobs. Solid hiring in couriers and messengers (+5,100 positions) and warehousing and storage (+8,000 jobs) also contributed, as the industry readies for the holiday season.

• The Financial Activities industry’s net gain of 13,000 jobs was skewed more toward finance and insurance (+8,100 positions), but real estate and rental and leasing added a moderate amount of jobs (+4,200) in November.

• The Information industry bounced back in November, gaining 13,000 jobs with the help of the seasonal pattern of motion picture industry employment (+7,100 positions) and gains in the other information services subsector (+6,200 jobs).

• The Government sector’s 12,000-job gain for November was due to strong growth at the local level (+13,000 positions) as both local government education (+7,100 jobs) and local government, excluding education (+6,400 positions) had strong months.

• The Other Services sector gained 9,000 jobs in November, with solid contributions among its three subsectors – membership associations and organizations (+3,500 jobs), personal and laundry services (+2,000 positions), and repair and maintenance (+3,000 jobs).

• The Construction industry gained only 1,000 jobs in November, with gains in heavy and civil engineering construction (+2,100) and nonresidential specialty trade contractors (+2,100) offset by losses in residential specialty trade contractors (-2,300) and nonresidential building construction (-2,600).

• The Mining and Logging industry lost 7,000 jobs in November as support activities for mining (-5,700 positions) weighed down the industry for the month.