by Abram Brown, Forbes.com
Growth in the nation’s labor market far exceeded forecasts last month, a possible signal that businesses are proving resilient through the disruption caused by Superstorm Sandy, the monster hurricane that punished the East Coast and disrupted that key artery of the economy, and the uncertain political situation. The unemployment rate, meanwhile, fell to 7.7%.
The U.S. added 146,000 new jobs last month, new Labor Department data shows. Government economists say the hurricane didn’t impede November’s tally. Last month’s figure fits with the labor market’s performance this year. The country had averaged a monthly gain of 151,000 this year. In the past three months, that figure was closer to 170,000. Another employment metric, which accounts for job hunters and those forced to work part-time, supported the headline figure: Total unemployed fell to 14.4% from 14.6% a month earlier.
Joblessness declined to the lowest point since December 2008. This was accompanied by a decline in the labor force; the labor force participation rate fell to by 20 basis points to 63.6%. Without this decline in the labor force, mostly the result of people halting the job search after Sandy, unemployment would not have fallen. As they return this morning, unemployment could return to nearer 7.9%.
Significantly, the Labor Department lowered estimates on October’s job growth (by 33,000) and September’s growth (by 16,000).
Today’s upbeat estimate on job growth comes as a complete surprise. Economists had expected figures well below 100,000. Some pegged between 50,000 and 80,000. Market participants immediately cautioned that these government figures will be revised in coming months. To be sure, other economic numbers had seemed to show a contradictory picture of the nation’s health. Weekly reports on jobless claims have shown an immediate increase after Sandy, and they remain elevated still—recording a four-week average of more than 400,000. Businesses, simultaneously, have seemed to stay on the sidelines; as several other economic indicators apparently reinforced, most are postponing any major investments until later this year. The fiscal cliff, a series of tax increases and spending cuts set to begin Jan. 1, threaten to impede business growth.
Regardless, a 150,000 monthly gain still falls short. Economists say the nation needs to create double that figure to lower unemployment and help the economy heal.
U.S. stocks immediately rose after this morning’s data release. The Dow Jones industrial average gained 0.4% to 13,131.33. The S&P 500 index climbed 0.2%. And the Nasdaq composite declined 0.1% to 2,987.53.
Basic material stocks pushed the market higher. Freeport-McMoRan Copperwent up 5%. Barrick Gold increased 1.1%. Cliffs Natural Resources added 1.1%.
“The labor market continues to improve gradually, which is good news given fears over the fiscal cliff,” says IHS economist Nigel Gault. “That suggests that if we can successfully negotiate the cliff, employment growth should accelerate in 2013.”
A piece of economic data that complicates today’s picture was also released this morning. The Michigan Consumer Sentiment Index fell to 74.5 in early December, down from 82.7 in November, likely from the worry over the fiscal cliff.
In November, retail added the most jobs (53,000). Business services (43,000) and health care (20,000) were also major job creators.
Meantime, a decline in construction and manufacturing growth show Sandy’s lingering effects, as well as how the fiscal cliff roils the economy. All told, some 370,000 Americans say they were unable last month to work because of weather. While a record high for November, it still isn’t as much as the 1 million that sometimes report in December and January during bad snowstorms.
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