Employment: Slower Than Expected Gains

Bottom Line: Job gains were slower than expected in November as employment in retail trade contracted. The usual seasonal hiring doesn't appear to have happened as covid cases started to spike. On the plus side, the wholesale trade and transportation segment, which would include workers in online retail distribution centers, grew sharply more than the recent average. Employment in the government sector also fell 90+ thousand as more temporary census workers were let go. The household survey showed a decline in jobs after huge gains in October. The participation rate, though, fell, pushing the unemployment rate down to 6.7%, mostly as expected. Wage growth was moderately stronger than expected but remained subdued on a trend basis as most of the re-hiring of workers has been in lower-waged jobs. Wage growth appears to be returning to a long-term trend more quickly than other labor force metrics. The new trend rate looks to be slightly slower than before the pandemic. Overall, this report showed that the rebound in the labor market decelerated coming into year-end. While there are positive signs that much of the pandemic-related unemployment will prove frictional with jobs shifting away from traditional retail towards online distribution centers, there are few signs that overall employment can return to pre-pandemic levels anytime soon. Payroll Employment rose by 245k in November, compared with market expectations for an increase of 580k. The prior 2 months were revised, lower in October by 28k and higher in September by 39k. Government jobs FELL by 99k. Consequently, private sector jobs ROSE by 344k. Overall employment is now -6.1% BELOW its year-ago level, Over the past 12 months, 9,185k jobs have been shed. In November, the job gains were in:

• Trade, Transportation & Utilities (+156k with -35k in Retail Trade),
• Professional & Business Services (+60k with the addition of 32.2k in Temp Help Services),
• Education & Health Services (+60k),
• Leisure & Hospitality (+31k),
• Construction (+27k), Construction (+27k),
• Financial Activities (+15k), and Other Services (+7k).

Jobs were shed in Government (-99k). The Unemployment Rate FELL by 0.2 percentage points in November to 6.7%, compared with market expectations for a small decline to 6.7%. Household employment fell by 74k while the labor force declined by 400k, resulting in a decrease in the number of unemployed of 326k. The Labor Force Participation Rate FELL by 0.2 percentage points to 61.5%. The Employment-Population Ratio FELL by 0.1 percentage points to 57.3%. The number of people Working Part-Time for Economic Reasons ROSE by 3k to 6,568k. while Long-Term Unemployment ROSE by 385k to 3,941k (accounting for 36.7% of the unemployed), while the Mean Duration of Unemployment ROSE by 2.0 weeks to 23.2 weeks. There are now 10.7 million people officially unemployed. In addition, there are another 7,136k people who say they want a job but are not currently looking for one. Finally, another 6,568k people are working part-time because of slack economic conditions. The Index of Aggregate Hours ROSE by 0.3%, combining the solid gain in private payroll employment and the steady workweek. Hourly Earnings ROSE by 0.3% in November, above market expectations of 0.1%. Hourly earnings are now 4.4% ABOVE their year-ago level. Weekly Earnings also ROSE by 0.3%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 5.9% ABOVE their year-ago level. The Average Workweek was UNCHANGED at 34.8 hours, ABOVE the market consensus at 34.6 hours.