The November Employment Situation report released this morning by the U.S. Bureau of Labor Statistics surprised on the downside. Payroll employment grew by a less-than-expected 39,000 including 50,000 private sector hires partially offset by a loss of 11,000 government jobs, while the unemployment rate jumped from 9.6 to 9.8 percent. This was below the consensus for about 140,000 and below the 125,000 needed just to accommodate the growing labor force.
Other indicators such as the Institute for Supply Management’s manufacturing and non-manufacturing indexes paint a better picture. Both indexes are above the break-even level of 50 as are their respective employment sub-indexes, suggesting that payrolls are expanding across a broad swath of industries – a trend corroborated by the recent ADP National Employment Report. Moreover, there could be some seasonal adjustment issues with the BLS data related to hiring in the retail sector.
Nevertheless, the BLS report captures the most attention and sets the terms for economic discourse over the ensuing month. A silver lining might be that the frustratingly slow labor market recovery will keep attention focused on policy choices needed to set the stage for more private-sector hiring such as simplifying the tax code and controlling the long-term budget deficit.