US Hiring Disappoints In November

The United States added just 210,000 jobs last month, the government reported, less than half the increase analysts were expecting and adding to the headwinds facing President Joe Biden.

The White House has been banking on a solid economic recovery to bolster public support for Biden and his massive Build Back Better spending bill that's inching its way through Congress, but the data released on Friday presented a complicated picture of American workers' prospects, as businesses recover from the Covid-19 pandemic.

The good news was that the unemployment rate fell more than expected, with a four-tenth decline to 4.2 percent, according to the Labour Department, while the country has gained an average of 550,000 jobs each month this year, even with November's undershoot.

But major sectors such as retail and leisure and hospitality saw underwhelming hiring, while businesses are again bracing for the spread of the Omicron variant of Covid-19, which could hamper the recovery, as the Delta wave did over the summer.

"Overall, the labour market recovery is progressing, although with some potential downside risk ahead from the Omicron variant," Rubeela Farooqi of High Frequency Economics said of the report.

With inflation surging across the world's largest economy, analysts said the data bolstered their expectations for the Federal Reserve, which is likely to accelerate the pullback of its stimulus measures when it meets later this month.

That would set the stage for it to hike rates from zero more quickly than expected, the most potent weapon against price increases in its arsenal.

"The Fed is focused on the inflation overshoot, which will get much worse before it gets better, and officials have made it very clear that they want to take out insurance against the risk that the latest spike does not become embedded," said Ian Shepherdson of Pantheon Macroeconomics.

The economy remains short nearly four million jobs compared to the pre-pandemic level, but the data nonetheless contained signs of improvement in the labour market.

The number of unemployed people dropped 542,000 to 6.9 million, the report said, but remains higher than the pre-pandemic level of 5.7 million.

The number of people on temporary layoff, which hit 18 million in April 2020 when the pandemic disruptions were at their worst, dropped to 801,000, about where it was before Covid-19 struck the economy.

Hiring last month may have been overall more robust than it appears. A separate Labour Department survey focused on households showed an overall gain in employment of more than 1.1 million from October.

The unemployment rate for most racial groups declined in November, though wide disparities remain.

Unemployment for Hispanics was at 5.2 percent and for Black Americans 6.7 percent, while for white people, it was at 3.7 percent.

A slight improvement was seen in the share of people employed or looking for a job, which has been stagnant in recent months as many Americans opted not to work.

It rose slightly to 61.8 percent, its highest level since the pandemic, but was 1.5 percentage points below where it was before the pandemic.

"This is not (quite) a statistically significant increase; further gains are needed to establish a real change from the net flat trend since summer 2020," Shepherdson said.

Retailers are this year looking to make up for sales lost in the 2020 holiday season, when Covid-19 infections were rife, but employment in that sector declined by 20,000 last month.

Hiring in the leisure and hospitality industry, which encompasses the bars and restaurants that were hardest hit by pandemic restrictions, rose only 23,000 after much greater gains in previous months.

Professional and business services added the most of any industry, at 90,000 jobs, while manufacturing and construction each added 31,000.

Average hourly earnings ticked up again to gain 4.8 percent over the past 12 months, though that was below the rapid 6.2 percent annual increase in consumer prices that's caused by supply chain snarls, surging energy prices and demand from American consumers.

September and October's payroll figures were revised slightly upward, but not enough to offset the miss in November payrolls. (AFP)