Unemployment rate drops to 7.7% as economy shrugs off Sandy
By Neil Irwin,
The unemployment rate dipped and job creation remained steady in November, as the U.S. economy shrugged off any major impact from Hurricane Sandy and showed surprising resilience in the run-up to the “fiscal cliff.”
The November jobs report, released Friday morning, was a pleasant surprise to analysts who had braced for some ugly numbers for a period during which much of the Northeast was reeling from the superstorm. In fact, the national unemployment rate fell to 7.7 percent from 7.9 percent, and the nation added 146,000 jobs, not the mere 85,000 that forecasters had expected.
But the report contained some ominous elements as well. The jobless rate dropped in large part because the labor force fell by 350,000, suggesting that people gave up looking for work. The number of people saying they had a job actually fell by 122,000. And the Labor Department revised downward its estimates of job creation in September and October by a combined 49,000 jobs.
Add it all up, and the conclusion is this: The trend that we thought was underway, of a U.S. economy growing steadily but at an unspectacular pace, remains underway. It was not undone either by the hurricane or by anxiety over looming austerity — the tax hikes and spending cuts scheduled to take effect Jan. 1 if Congress and the White House can’t reach a deal.
Indeed, the job market has been remarkably consistent over the past year, adding an average of 157,000 jobs a month — well above the level needed to keep pace with a growing labor force but slow enough that it would still take years to bring unemployment down to the range of 5 to 6 percent. The new report shows no real shift in that trend, which in its way is still good news: It suggests that businesses did not bring their hiring to a halt in November out of fear that lawmakers will be unable to reach a deal and the nation will hit the fiscal cliff.
The report was “stronger than feared but does not materially change the outlook for the labor market,” economist Ryan Wang of HSBC said in a research note.
Markets were little changed Friday, with the Dow Jones industrial average up 0.62 percent and the Standard & Poor’s 500-stock index up 0.29 percent.
The November report is the first snapshot of the job market released since President Obama was re-elected Nov. 6 and the first since negotiations over deficit reduction between the White House and House Republicans have resumed and intensified.
Responding to the report Friday morning, House Speaker John A. Boehner (R-Ohio) referred to those negotiations and focused on the people who are out of work rather than on the drop in the jobless rate.
“The Democrats’ slow-walk strategy is unfair to taxpayers, unfair to small businesses, and unfair to all those looking for work,” Boehner said in a statement. “If the president doesn’t like our plan, he has an obligation to send us one that can pass both houses of Congress as quickly as possible. We’re ready and eager to work with him on such a proposal.”
Alan Krueger, chairman of the White House Council of Economic Advisers, said in a statement that “while more work remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression.”
Forecasters had expected a significant impact from Sandy, which struck at the tail end of October and disrupted commerce in large parts of New Jersey, New York and surrounding states. The level of new claims for unemployment benefits spiked from about 370,000 before the storm to 451,000 in the first week of November.
But the Labor Department said that “survey response rates in the affected states were within normal ranges” and that “our analysis suggests that Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November.” More detailed data will be available Dec. 21, when state jobs numbers will be released, allowing a closer look at any employment changes in the affected states.
The biggest category for job gains was the retail sector, which added 53,000 positions. But that growth could be due to Thanksgiving falling relatively early on the calendar this year, meaning retailers likely added temporary seasonal workers earlier than they normally would.
Other major sectors that saw job gains were professional and business services, which added 43,000 jobs, and leisure and hospitality, with 23,000.
The biggest category for job losses was construction, which shed 20,000 positions, though that may well be a Sandy effect, as construction sites temporarily shut down in the Northeast. If that’s the case, that sector will be expected to rebound in the months ahead, as those construction workers get back on the job and rebuilding efforts bring in more work.
Average hourly pay for private-sector workers rose 4 cents to $23.63, which meant a 0.3 percent increase in average weekly earnings.