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Financial News: U.S. Job Growth Disappoints But Unemployment Rate Drops

U.S. Job Growth Disappoints But Unemployment Rate Drops To Pandemic-Era Low

12/03/2021 - 09:19:00 (RTTNews)

(RTTNews) - A closely watched report released by the Labor Department on Friday showed employment in the U.S. increased by much less than expected in the month of November.

The report said non-farm payroll employment rose by 210,000 jobs in November after surging by an upwardly revised 546,000 jobs in October.

Economists had expected employment to spike by 550,000 jobs compared to the jump of 531,000 jobs originally reported for the previous month.

The relatively modest increase in employment reflected notable job growth in the professional and business services, transportation and warehousing, construction, and manufacturing sectors.

Meanwhile, employment in the retail sector fell by 20,400 jobs and government employment decreased by 25,000 jobs.

The report also showed a significant slowdown in the pace of job growth in the leisure and hospitality sector, which added just 23,000 jobs.

Andrew Hunter, Senior U.S. Economist at Capital Economics, said the muted job growth in the leisure and hospitality sector is an indication the "nascent winter wave of virus infections was now weighing on the sector."

"With new cases now on the rise again even before the potential impact of the Omicron variant, leisure sector employment growth looks set to remain weak over the winter," Hunter said.

He added, "The 20,000 slump in retail employment could also reflect the virus drag, although may also be a result of usual Black Friday spending shifting online."

Despite the much weaker than expected job growth, the unemployment rate slid to 4.2 percent in November from 4.6 percent in October. Economists had expected the unemployment rate to edge down to 4.5 percent.

With the much bigger than expected decrease, the unemployment rate fell to its lowest level since hitting 3.5 percent in February of 2020.

The drop in the unemployment rate came as household employment spiked by 1.136 million persons, outpacing the 594,000-person jump in the size of the labor force.

The report also showed average hourly earnings rose by $0.08 or percent to $31.03 in November, with annual wage growth unchanged at 4.8 percent.

Looking ahead, Hunter said, "We remain skeptical that a further significant recovery in the labor force lies ahead - particularly given the worsening virus situation and the potential Federal vaccine mandate."

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