A Nice November Jobs Surprise
By Robert Stein
December 6, 2013 10:57 AM
The labor market surprised to the upside in November, showing a lack of damage from the government shutdown. Nonfarm payrolls grew 203,000 in November after gaining 200,000 in October. Private-sector payrolls expanded 196,000 in November after gaining 214,000 in October.
The big negative for October was a 735,000 drop in civilian employment, an alternative measure of jobs that includes small business start-ups and which is measured at a different time of the month than the payroll survey. That figure rebounded 818,000 in November. Largely as a result, the unemployment rate dropped to 7 percent, a new low for the recovery. However, after dropping 720,000 in October, the size of the labor force only rebounded 455,000 in November, and is still below the levels of a year ago. This suggests the potential of a further rebound in the labor force in December/January, which may push the jobless rate back up slightly (or prevent it from falling further) in the short-term.
Apart from the good headlines – better than expected payrolls and a large drop in the jobless rate – the details of the report were also good. Total hours worked increased 0.5 percent, and are up 2.4 percent from last year. Average hourly earnings rose 0.2 percent, and are up 2 percent versus a year ago. Combined, this means total cash earnings are up 4.4 percent in the past year, or about 3.2 percent adjusted for inflation. This is more than enough for workers to keep pushing up spending, particularly in an environment where their financial obligations are low relative to income.
Also, once again a new report destroyed one of the recent negative stories about the job market: Part-time employment dropped for the fourth month in a row, and is now down 137,000 from a year ago.
The labor market could and would be doing better with a better set of public policies. But it is still improving. In the past year, nonfarm payrolls have grown at an average monthly rate of 191,000 while civilian employment is up 82,000 per month. Over time, these two rates of job growth should converge and the pace of growth in civilian employment is likely to accelerate.