| Employment Situation |
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Released On 12/3/2010 8:30:00 AM For Nov, 2010
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Prior | Prior Revised | Consensus | Consensus Range | Actual |
| Nonfarm Payrolls - M/M change | 151,000 | 172,000 | 168,000 | 100,000 to 200,000 | 39,000 | | Unemployment Rate - Level | 9.6 % | | 9.7 % | 9.5 % to 9.7 % | 9.8 % | | Average Hourly Earnings - M/M change | 0.2 % | 0.3 % | 0.2 % | 0.1 % to 0.2 % | 0.0 % | | Av Workweek - All Employees | 34.3 hrs | | 34.3 hrs | 34.3 hrs to 34.3 hrs | 34.3 hrs | | Private Payrolls - M/M change | 159,000 | 160,000 | | | 50,000 |
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Highlights
Today's employment report stands out-unfortunately as a stray from the other good news this week. Payroll growth for November was unexpectedly soft and the unemployment rate rose. Payroll employment in November increased a soft 39,000, following a revised 172,000 boost in October and a 24,000 dip in September. The latest figure fell short of the median forecast for a 168,000 advance. The September and October revisions were net up 38,000. Private sector payrolls increased 50,000 in November, following a 160,000 boost the month before.
Weakness in the latest month was in goods-producing and government sector jobs. Goods-producing employment declined 15,000, following a 3,000 rise in October. In the latest month, manufacturing fell 13,000; construction slipped 5,000; and mining rose 4,000.
Private service-providing gained 65,000 after a 157,000 increase in October. Within private services for November, professional & business services gained 53,000; health care rose 23,000 jobs; and leisure & hospitality increased 11,000. On the downside, retail trade fell 28,000.
Government jobs fell 11,000 after a 12,000 increase in October. The decrease reflects continued budget cutting at the local level. For the latest month, local government employment declined 14,000 with 4,000 in education and 10,000 in non-education. State government employment edged up 1,000 while federal jobs grew a mere 2,000.
Average hourly earnings were flat in November after rising 0.3 percent the prior month. The latest figure came in below the consensus projection for a 0.2 percent increase. The average workweek for all workers was unchanged at 34.3 hours, equaling expectations for 34.3 hours.
On a year-ago basis, overall payroll job growth slipped to up 0.6 percent in November from up 0.7 percent the prior month.
Turning to the household survey, the unemployment rate bumped up to 9.8 percent from 9.6 percent in October, topping analysts' forecast for 9.7 percent. The November rise reflected a 276,000 drop in household employment, a 276,000 jump in the unemployed, and a 103,000 increase in the civilian labor force.
The latest employment situation report clearly is disappointing. However, it very much is a curiosity as it is a stark contrast with the recent string of good economic news. There are several theories about November's sluggishness. First, businesses are still reluctant to hire despite improved demand. Second, the ADP report earlier this week showed strength in hiring by small businesses. This sector is a weak point in the government survey for payrolls and could improve with revisions. In fact, the BLS is starting to update its establishment birth/death factors on a quarterly basis for January 2011 data for release in February. Finally, there could be seasonal adjustment problems with hiring around the holidays. Traders are scratching their heads over whether the jobs report is an aberration from other economic news or whether the other economic news was a temporary head fake.
On the news, equity futures declined notably.
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Market Consensus before announcement
Nonfarm payroll employment in October rebounded 151,000, following a revised 41,000 decline in September and a 1,000 decrease in August. The October jobs report saw the last notable drop in temporary Census workers. Private nonfarm employment posted another gain, advancing 159,000 in October, following a revised boost of 107,000 in September. Wage inflation remains soft. Average hourly earnings gained 0.2 percent in October after rising 0.1 percent in September. The average workweek for all workers edged up to 34.3 hours from 34.2 hours in October, marginally topping expectations for 34.2 hours. Turning to the household survey, the unemployment rate was unchanged at 9.6 percent.
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Definition
The employment situation is a set of labor market indicators based on two separate surveys in this one report. Based on the Household Survey, the unemployment rate measures the number of unemployed as a percentage of the labor force. Other key series come from the Establishment Survey (of business establishments). Nonfarm payroll employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The average workweek reflects the number of hours worked in the nonfarm sector. Average hourly earnings reveal the basic hourly rate for major industries as indicated in nonfarm payrolls.
Why Investors Care
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![[Chart]](showimage.asp?imageid=20075)
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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
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![[Chart]](showimage.asp?imageid=20076)
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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
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