Tue, February 07, 2023

Jobs Market Failed to Meet Expectations

Weekly Jobless Claims, unemployment

The world’s largest economy created far fewer jobs than expected in November, in a sign that hiring started to slow even ahead of the new Covid variant.

 In November, nonfarm payrolls rose by just 210,000 according to the data provided by the Labor Department. Hopefully, the unemployment rate dropped sharply to 4.2% from 4.6%. The rate declined even though the labor force participation rate increased for the month to 61.8%. People decided to rejoin the labor force. As a result, the labor force participation rate reached its highest level since March 2020.

Importantly, the Dow Jones estimate was for 573,000 new jobs as well as a jobless rate of 4.5%. 

A more comprehensive measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons declined even more. It fell from 8.3% to 7.8%.

Jobs report and various sectors

In November, leisure and hospitality, which includes bars, restaurants, and similar businesses saw a gain of just 23,000. This sector regained nearly 7 million of the jobs lost at the depths of the Covid-19 pandemic. Still, it remains about 1.3 million below its February 2020 level, with an unemployment rate stuck at 7.5%.

Last month, several sectors achieved great results. Professional and business services added 90,000 jobs, transportation and warehousing 50,000 and construction 31,000.

Worker wages rose by 0.26% in November and 4.8% from a year ago. Both numbers mentioned above were slightly below estimates.

The Federal Reserve is closely monitoring the state of the labor market. Policymakers want to know how close the economy is to a full recovery from the pandemic. The country suffered its shortest, nonetheless, steepest recession in the early days of Covid-19. The economy continues to recover, but it won’t be easy to solve all issues in a short period of time.

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