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Employment Situation  
Released On 12/4/2009 8:30:00 AM For Nov, 2009
PriorConsensusConsensus RangeActual
Nonfarm Payrolls - M/M change-190,000 -100,000 -160,000  to -75,000 -11,000 
Unemployment Rate - Level10.2 %10.2 %10.0 % to 10.2 %10.0 %
Average Hourly Earnings - M/M change0.3 %0.2 %0.1 % to 0.2 %0.1 %
Av Workweek - All Employees33.0 hrs33.1 hrs30.0 hrs to 33.1 hrs33.2 hrs

Traders did not need their second cup of coffee this morning as they were jolted by a sharply better than expected jobs report for November. Payroll jobs barely moved down while the unemployment rate actually eased. Nonfarm payroll employment in November edged down only 11,000, following a revised decline of 111,000 in October and a revised decrease of 139,000 in September. October and September revisions were up 159,000 net (less worse) for the two months. As suggested by recently lower initial jobless claims, the November contraction in payroll employment was far better than the market forecast for a 100,000 decrease. Job losses in the construction, manufacturing, and information industries were offset by job gains in temporary help services and health care.

Improvement in November payroll numbers was due both to a less negative goods-producing sector and a gain in jobs in the service-providing sector. Goods-producing jobs declined 69,000 in November, following a 113,000 drop the month before. Construction jobs decreased 27,000 while manufacturing decreased 41,000 and mining slipped 1,000.

The boost in service-providing jobs was mainly in professional & business services, up 86,000 with most of that coming from temporary help services, up 52,000. Education & health services and government components also posted increases. However, declines were seen in trade & transportation, leisure & hospitality, and financial activities.

On a year-ago basis, payroll jobs improved to down 3.5 percent in November from minus 3.9 the prior month.

Wage inflation eased as average hourly earnings in November edged up 0.1 percent, following a 0.3 percent boost the prior month. The market had forecast a 0.2 percent gain. The average workweek points to pending improvement in hiring as the workweek rose to 33.2 hours in November from 33.0 hours in October and topping the consensus forecast for 33.1 hours. Employers typically boost the workweek before adding to their workforce during recovery.

From the household survey, the unemployment rate fell back to 10.0 percent from 10.2 percent in October. The consensus had projected no change at 10.2 percent.

Today's report is good news for workers and employers alike. And even retailers could benefit if confidence is boosted and consumers decide to spend a bit more. Equity futures surged on the news while Treasury rates firmed.

Consensus Outlook
Nonfarm payroll employment in October declined 190,000, following a decrease of 219,000 in September. Payroll losses were widespread in both goods-producing and service-providing sectors but declines were sharper in the goods side. Goods-producing jobs contracted 129,000 in October while service-providing jobs slipped 61,000. The one notable positive in the payroll survey portion of the employment situation was a 34,000 gain in temp help. This category is often seen as a leading indicator of hiring intentions by businesses. Wage inflation firmed as average hourly earnings in October rose 0.3 percent, following a 0.1 percent uptick the month before. The average workweek was steady at 33.0 in October, falling short of the market forecast for 33.1 hours. Turning to the household survey, the ranks of the unemployed continued to rise as the civilian unemployment rate worsened to 10.2 percent from 9.8 percent in September. Looking ahead, traders will be paying close attention to early warnings from other reports to see if they should adjust their view of the consensus forecasts. Watch for the employment indexes in the ISM manufacturing and non-manufacturing surveys, the ADP employment report, and the Monster Employment Index.

The most closely watched of all economic indicators, the employment situation is a set of monthly labor market indicators based on two separate reports: the establishment survey which tracks 650,000 worksites and offers the nonfarm payroll and average hourly earnings headlines and the household survey which interviews 60,000 households and generates the unemployment rate.

Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.

The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.  Why Investors Care
During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month.
Data Source: Haver Analytics
The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy.
Data Source: Haver Analytics

2009 Release Schedule
Released On: 1/92/63/64/35/86/57/28/79/410/211/612/4
Release For: DecJanFebMarAprMayJunJulAugSepOctNov

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