Jobs report brings cheer as unemployment falls to a five-year low

The national unemployment rate fell to a five-year low of 7 percent in November and payrolls grew by 203,000.

“This is a solid payroll report any way you slice and dice it,” said Scott Anderson, an analyst with Bank of the West. “Income growth and hours worked are on the rise as well.”

The better-than-expected numbers included a net gain of 196,000 private-sector and 7,000 government jobs and built on revised job growth of 200,000 in October.

Joblessness had been reported at 7.3 percent in October.

The government reports published Friday cheered stock traders and economists who think the so-far modest post-recession turnaround in the job market may be sustainable.

But economists would like to see more than a couple of months of labor market improvement. And most analysts still don’t see a big surge ahead in hiring.

According to the U.S. Bureau of Labor Statistics’ payroll survey, October and November provided the biggest back-to-back job growth since February and March. The autumn gains were an improvement over the 158,000 average job growth during the summer months.

The gains fueled speculation that the Federal Reserve could begin pulling back on its ongoing economic stimulus program after it reviews the job market progress. Fed policy makers meet Dec. 17 and 18.

“I still think January is more likely,” Anderson said, referring to possible “tapering” by the central bank’s policy makers of its bond buying and other stimulus actions.

Russell Price, senior economist at Ameriprise Financial, was among analysts who said that despite job market momentum, they didn’t expect tapering activity until March.

But Dan Heckman, national investment consultant for U.S. Bank Private Client Reserve in Kansas City, said some Fed action might occur this month, particularly a pullback in its Treasury bond buying.

“I think (Fed chairman) Ben Bernanke wants to do something before he leaves office,” Heckman said. “The last couple months have shown that despite the political shenanigans in Washington, people have continued to spend and work.”

The government surveys non-farm businesses, governments and non-profits to determine the number of payroll jobs lost and gained. It surveys households to determine how many people report they are working. The payroll jobs data is considered less volatile and more reliable, especially after the routine monthly revisions.

Positives in the November jobs reports included:

• The household survey indicated that 818,000 more people were working in November than in October and 365,000 fewer people were unemployed.

• The labor force participation rate rose to 63 percent of the 16-and-over population, or 0.2 percent point higher than its low point.

• The payroll survey indicated that employment is 1.7 percent higher than its year-earlier level.

• Job gains occurred in trade, transportation, utilities; professional and business services; education and health services; manufacturing and construction.

Soft spots remain, though.

The number of long-term unemployed rose by 3,000 to represent more than one-third of the nation’s 10.9 million jobless, and the average length of unemployment rose by 1.1 weeks to 37.2 weeks. Workers are considered long-term unemployed if they’re in the job market for 26 weeks or more.

Some sectors, including financial activities and information, continued to shed jobs last month.

Overall, employment is still nearly 1.3 million jobs beneath its peak in January 2008, the month after the recession officially began.

The government did have some good news for the currently employed: Both hourly and weekly earnings grew slightly in November. Average hourly earnings of $20.31 were 1.7 percent higher than their year-ago level, and average weekly earnings of $833.18 were 2.3 percent above their year-ago level.

The length of the average work week, an indication of increasing demand for goods and services, rose by 0.1 hour to 34.5 hours.

The monthly report also charted an increase in temporary help hiring — predictable in the fourth quarter because of retail hiring.

The temp-hiring uptick “may be a hopeful sign of future hiring,” said Sophia Koropeckyj, managing director at Moody’s Analytics, “but not necessarily if employers are still hesitant to take on permanent workers.”

She also noted that a separate economic report his week showed an inventory buildup in the third quarter, and that raises “risk of softer manufacturing activity in the near term.”

Another area of concern is that the unemployment rate for 18- to 29-year-olds, the age at which careers usually are started, has remained high. It came in at 10 percent in November, a decline from 10.9 percent in October, but too many young people continue to job hunt or are under-employed.

The government’s unofficial jobless rate, which includes some of those under-employed workers as well as “discouraged” and “marginally attached” members of the labor force who have temporarily stopped job hunting, also remained high at 13.2 percent in November.

Still, the expanded jobless measure was better than its year earlier 14.4 percent.

Analysts cautioned that the November unemployment rate may have shown unexpected improvement because of the return to work of hundreds of thousands of federal employees who had been temporarily furloughed during October’s partial government shutdown.

U.S. Sen. Amy Klobuchar, a Minnesota Democrat and vice chairwoman of the congressional Joint Economic Committee, said the job market progress “underscores the need to work towards a bipartisan budget agreement that will stop us from lurching from crisis to crisis and provide much-needed certainty for our businesses and families that drive growth.”