story by Shobhana Chandra
Payrolls rose more than anticipated and the jobless rate fell to an almost four-year low in November, indicating the labor market withstood the impact of superstorm Sandy.
The unemployment rate fell to 7.7%, the lowest since December 2008, as size of the labor force shrank.
Employment climbed by 146,000 following a revised 138,000 gain in October that was less than initially estimated, Labor Department figures showed today (Dec. 7) in Washington. The median estimate of 91 economists surveyed by Bloomberg called for a gain of 85,000. Sandy “did not substantively” affect the data, the agency said.
The gain in hiring indicates consumer spending, the biggest part of the economy, will keep expanding. At the same time, concern about more than $600 billion in fiscal tightening slated for early next year threatens growth and may set back employment, one reason Federal Reserve policy makers are weighing increasing stimulus.
The pace of payroll growth “is too slow to make much of a dent into the pool of unemployed, but it’s steady and persistent,” said James Glassman, senior economist at JPMorgan Chase & Co. in New York. “If you look into next year, there’s a lot of reasons why we should be expecting better.”
Another report today showed confidence among consumers fell more than forecast in December as Americans’ expectations slumped to a one-year low. The Thomson Reuters/University of Michigan preliminary consumer sentiment index decreased to 74.5, the weakest in four months, from 82.7 in November. Economists projected a preliminary reading of 82 for December, according to the median of 67 estimates in a Bloomberg survey.
Estimates for the change in November payrolls ranged from increases of 15,000 to 145,000 after a previously reported 171,000 gain in October. The revision to the October payrolls figure reflected a 51,000 drop in government jobs.
The unemployment rate in November was forecast to hold at 7.9%, according to the survey median. Projections ranged from 7.9% to 8.1%.
The poll of households, used to calculate the jobless rate, showed that 369,000 people were not at work because of bad weather during the survey week. The average of the last 10 Novembers was 70,000. The Labor Department said it conducted the survey a week earlier than typical because of the Thanksgiving holiday.
The Labor Department said that the rates of responses to its surveys “were within normal ranges” after Sandy made landfall on Oct. 29 on the East Coast.
Private payrolls, which exclude government agencies, rose 147,000 in November. They were projected to rise by 90,000, the survey showed.
The participation rate, which indicates the share of working-age people in the labor force, fell to 63.6%, from the prior month’s 63.8%.
Factory payrolls decreased by 7,000 as job losses in food manufacturing and chemicals more than offset gains at automakers.
A rebound in auto purchases after Sandy signals carmakers and dealers may continue to boost employment. Industry sales of cars and light trucks rose to 15.5 million at an annual rate in November, the best pace since February 2008, according to Ward’s Automotive Group.
Employment at private service-providers increased by 169,000 in November, today’s report showed. Payrolls at construction companies dropped by 20,000 workers.
Average hourly earnings climbed to $23.63 from $23.59 in the prior month. The average work week for all workers held at 34.4 hours.
Sandy left about 8 million homes and businesses without power for days after making landfall in New Jersey on Oct. 29. The 26 counties designated as major disaster areas after the storm had an average 1,301 labor force participants per square mile, about 30 times the average labor force density for the U.S. in 2011, according to the Labor Department.
Economists were anticipating the jobs report would show Sandy depressed November payrolls. Nomura Securities International Inc. projected a hit of 45,000, Goldman Sachs Group Inc. estimated a reduction of about 50,000, while UBS Securities LLC and Deutsche Bank Securities Inc. put the fallout at 150,000.
An early Thanksgiving may have boosted payrolls by about 75,000 last month, according to UBS projections as companies such as retailers took on extra staff sooner than normal.
Businesses that stepped up hiring for the holidays include Macy’s Inc. The second-biggest U.S. department-store chain said it would add about 2,000 more seasonal workers than the 78,000 it hired last year. Toys ‘R’ Us Inc., the world’s largest toy retailer, reported plans to employ 45,000 temporary staff, up 5,000 from the 2011 season.
The rebound in the housing industry is bearing fruit for furniture makers, some of whom are adding workers to keep up with demand.
At the same time, hiring and investment is being held back by some on concern about the so-called fiscal cliff, as well as the global slowdown in growth.
“We’re expecting the same sort of a slow-growth environment, that’s our best view of 2013,” Fredrik Eliasson, chief financial officer of CSX Corp., the largest eastern U.S. railroad, said on a Nov. 28 teleconference with analysts. “There are a lot of uncertainties out there in the world at this point between what’s going on here with the fiscal cliff and between Europe and China.”
Fed officials are considering whether to step up easing to stimulate the economy and trim the jobless rate, which prior to September exceeded 8% for 43 consecutive months, the longest stretch in monthly records going back to 1948.
“Although the economy continues to expand, we must grow faster if we are to put all of our jobless workers and idle businesses back to work,” William Dudley, president of the Federal Reserve Bank of New York, said in a Nov. 29 speech. He called the unemployment rate “unacceptably high.”