The U.S. economy created far fewer jobs than expected in November, before a new Covid threat created a scare that growth could slow into the winter, the Labor Department reported Friday.
Nonfarm payrolls increased by just 210,000 for the month, though the unemployment rate fell sharply to 4.2% from 4.6%, even though the labor force participation rate increased for the month to 61.8%, its highest level since March 2020.
The Dow Jones estimate was for 573,000 new jobs and a jobless level of 4.5% for an economy beset by a chronic labor shortage.
A more encompassing measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons dropped even more, tumbling to 7.8% from 8.3%. The survey of households painted a more optimistic jobs picture, indicating an employment gain of 594,000 for the month.
Leisure and hospitality, which includes bars, restaurants, hotels and similar businesses, saw a gain of just 23,000 after being a leading job creator for much of the recovery.
Despite the disappointment, markets largely shrugged off the numbers, with stocks pointing to a higher open on Wall Street.
Initial jobs tallies this year have seen substantial revisions, with months showing low counts initially often bumped higher. The October and September counts were bumped up a combined 82,000 in the report released Friday.
Sectors showing the biggest gains in November included professional and business services (90,000), transportation and warehousing (50,000) and construction (31,000). Even with the holiday shopping season approaching, retail saw a decline of 20,000. Government added 10,000 jobs to the total.
Worker wages climbed for the month, rising 0.26% for the month and 4.8% from a year ago. Both numbers were slightly below estimates.
Policymakers have been watching the employment figures closely to gauge how close the economy is to a full recovery from the depths of the pandemic. The U.S. suffered its shortest but steepest recession in the early days of the Covid-19 breakout and has been on a progressive but volatile path since.
Federal Reserve officials put a new wrinkle into the picture this week when they indicated that the measures they instituted to support growth could be coming to an end sooner than expected.
In congressional testimony earlier in the week, Fed Chairman Jerome Powell said he expects the central bank’s policy committee to discuss at its meeting this month stepping up the level at which it is tapering its monthly bond purchases. Powell said he sees the unwinding to conclude “a few months” sooner than expected, a move that would open the possibility for interest rate hikes.
San Francisco Fed President Mary Daly backed up those comments in remarks Thursday, saying that inflation that is stronger and more durable than expected is creating the need to rethink policy. She said the Fed should “at least, you know, think about raising the interest rate” and accelerating the taper pace.
Daly also hinted that the summary of economic projections to be released this month, in which officials show their expectations for the future, likely will point to interest rate hikes pulled forward into 2022. Markets currently expect the Fed to enact at least two quarter-percentage-point increases next year.
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