US employers slowed the pace of their hiring in November, creating 210,000 jobs, the smallest monthly gain in nearly a year.
But Friday’s Labor Department report also showed the country’s unemployment rate fell from 4.6% to 4.2%, proof that many more people reported having jobs. This is a historically low unemployment rate, but still above the pre-pandemic level of 3.5%.
Overall, November’s employment figures point to a labor market and economic recovery that appear resilient although threatened by soaring inflation, labor and supply shortages, and the potential impact of the downturn. omicron variant of the coronavirus.
For months, employers have struggled with labor shortages as many people who lost their jobs during the pandemic have not, for various reasons, returned to the workforce. But over the past month, more Americans have pulled out to look for jobs and have generally been hired quickly.
This positive trend suggests that November was a healthier month for job growth than the modest 210,000 gain the government reported in its business survey on Friday. The unemployment rate is calculated from a separate household survey. The survey found that a much larger number of an additional 1.1 million people reported having a job last month. The results of the two surveys are generally consistent over the long term but sometimes diverge sharply in any given month, as they did in November.
The household survey found that the number of unemployed Americans fell to 6.9 million in November, not well above the pre-pandemic number of 5.7 million. And average wages, which have risen as employers try to attract or keep workers, are up 4.8% from a year ago.
The government’s business survey showed a slowdown last month in hiring at restaurants, bars and hotels, which created just 23,000 jobs, down from 170,000 in October. This could reflect the effects of a slight increase in COVID-19 cases last month and a reduction in outdoor meals.
Retailers cut 20,000 jobs, a sign that hiring during the holidays has not been as strong as in previous years. But transportation and warehousing companies added 50,000 jobs, indicating that online retailers and shippers are planning healthy online shopping.
The employment outlook for the coming months has become more blurry with the emergence of the omicron variant. Little is known about omicron, and large-scale business closures are considered unlikely. Still, omicron could discourage some Americans from traveling, shopping and dining out in the coming months and potentially slowing the economy.
For now, however, Americans are spending freely and the economy is expected to grow at an annual rate of 7% in the last three months of the year, a significant rebound from the 2.1% pace in the previous quarter. , when the delta variant got hampered. growth.
Nearly 600,000 people joined the workforce last month, increasing the proportion of Americans who are working or looking for work. If this long-awaited development continues, it could indicate stronger job growth to come.
The proportion of Americans in the labor force rose from 61.6% to 61.8%, the first significant increase since April.
Even though the unemployment rate has fallen steadily this year, the proportion of Americans who are working or looking for work has barely budged. A shortage of job seekers tends to limit hiring and forces companies to pay more to attract and retain employees. A higher salary can help support spending and growth. But it can also fuel inflation if companies raise prices to offset their higher labor costs, which they often do.
One of the results is that there are now around 3.6 million fewer people with jobs than there were before the pandemic. Yet only about a third of them are actively looking for work and are classified as unemployed. The remaining two-thirds are no longer looking for a job and are therefore not counted as unemployed. The government classifies people as unemployed only if they are actively looking for work.
Whether or not more people start looking for work is a critical question for the Federal Reserve. If the proportion of people who have or are looking for a job does not increase much, that would suggest that the Fed is approaching its maximum employment target.
With inflation at a three-decade high and well above the Fed’s annual 2% target, meeting his tenure would increase pressure on President Jerome Powell to raise interest rates as soon as possible. This would make loans more expensive for many individuals and businesses.
About half of those who left the workforce have retired. The other half include parents, mostly mothers, who have stayed at home to care for children during school and daycare closings. For some of these women, child care remains unavailable or unaffordable. Other people have become self-employed. And others continue to delay their job searches for fear of contracting COVID-19.