November Job Growth Slowed as Income Fell

Gain Was Smallest Posted in 4 Months

U.S. job growth slowed sharply last month, and many workers' incomes fell, as automakers, airlines and retailers trimmed their payrolls, reducing consumers' buying power just as the holiday season was beginning.

Employers added 112,000 jobs in November, the smallest gain in four months, and below the roughly 150,000 per month that economists think are needed to keep up with population growth, the Labor Department reported yesterday. The department also shaved 54,000 jobs off its previous estimates of October and September gains in non-farm payrolls.

The unemployment rate slipped to 5.4 percent from 5.5 percent, which the department called "about unchanged," noting that it has been at either of those two levels every month since July.

Average weekly wages dropped by $1.25 to $533.47 for most workers on private payrolls.

The earnings figures help "explain the weak start to holiday retail sales," Stuart G. Hoffman, chief economist at PNC Financial Services Group Inc., wrote in an analysis.

The labor report came a day after the nation's major retail chains reported disappointing results for November. Sales at stores open for more than a year rose just 1.7 percent last month, compared with a 3.7 percent gain in November 2003, according to the International Council of Shopping Centers. Several companies reported falling sales, including Gap Inc.; Federated Department Stores Inc., which owns Bloomingdale's and Macy's; and May Department Stores Co., which owns Hecht's, Lord & Taylor and Filene's.

Several big chains, including industry giant Wal-Mart Stores Inc., quickly announced that they will use deeper discounts and bigger promotions to try to win the business of the lower- and middle-income shoppers who have been hit hardest by recent increases in food and energy prices.

"The recent job picture indicates that the holiday shopping season will be a decent, not spectacular one," wrote Sung Won Sohn, chief economic officer for Wells Fargo Bank.

The job numbers did not change widespread expectations that the Federal Reserve will raise its benchmark short-term interest rate for a fifth time this year when policymakers meet Dec. 14 and that it will continue to move it up gradually in the year ahead to keep inflation contained.

Many economists, including some at the Fed, have worried that sluggish job and wage growth might sap the strength of the economic expansion in coming months, particularly at a time of rising interest rates, a growing trade gap and uncertainty about oil prices. For some, this is an argument that might justify a slightly slower pace of rate increases over the next year.