Employment data is supposed to be a lagging indicator, so given the spate of other solid data on the health of the US economy in the past month, November’s weak jobs report on Friday could be considered an aberration.
That’s certainly one way of looking at it, another is that it was another accurate gauge to the underlying health of the economy and that all the other figures on improving production, retail sales and pending home sales were statistical noise or aberrations in themselves.
The unemployment rate rose to 9.8%, which could be bad or good, depending on what caused it.
In contrast, this week’s employment report in Australia is forecast to add from 12,000 to 25,000 new jobs, with the unemployment rate falling to 5.2% from the 5.4% rate in October.
For all the talk of a slowing economy from the September GDP numbers, Australia is a haven of job creation compared to what we are still seeing in the US.
And it could become worse if the US Congress won’t, or can’t, extend benefits for around 2 million people.
The benefits expired at the end of November and the Congress has until next week to renew them otherwise many people will lose their benefits completely.
If this happens the jobless rate and the number of unemployed people will skyrocket.
The so-called underemployment rate — which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking — was steady on 17%, and those people unemployed for 27 weeks or more increased as a percentage of all jobless to 41.9%, the highest since August.
Both are the best indicators about how desperate the US jobs market remains and a good explanation about why there was a rise in the jobless rate.
Normally a rise in the employment rate at this time in a recovery is a sign that more unemployed people are back looking for work.
But with some industries cutting employment (especially manufacturing), the rise in the jobless rate last month resulted from job cuts.
But the size of revisions to previous month’s jobs figures showed a definite improving trend in employment creation, so the huge fall in new jobs to a net 39,000 seems a bit hard to believe.
October’s report said 151,000 jobs were added, the revised figure now is 172,000.
But November saw a completely different story.
Private payrolls rose by 50,000 last month, but 11,000 jobs were lost from government.
The end result, just 39,000 new jobs created.
Economists had forecast 160,000 new jobs for November.
Financial firms cut 9,000 jobs and construction companies and retailers over 32,000 between them (28,000 among retailers in the run up to the Thanksgiving sales period).
Manufacturing payrolls dropped by 13,000 in November, the most in three months and despite the improved production data, especially from the car industry.
Average hourly earnings and the average work week – both important indicators of future hiring – were flat compared with October.
The number of unemployed Americans rose to 15.1 million last month, including a record 6.4 million women.
Economists say the weak job growth supported the Federal Reserve’s decision to start a second round of quantitative easing last month with $US600 billion of asset purchases.
American GDP grew an annual 2.5% in the September quarter, half the rate of December quarter of last year.
For all the promising signs, the GDP expanded at a 2.5% annual rate in the third quarter, half the pace in the last three months of 2009.
No wonder the US markets lapped up the press release from CBS on Friday that revealed some details of the Ben Bernanke interview that will air around mid morning in Australia.
People in the markets here will be watching during trading, in the US it will be a must Sunday night watch for many in the markets.
