7 December 2012 Last updated at 11:29 ET
The US added 146,000 jobs in November, official data shows, as the economy seemingly shrugged off storm Sandy.
The unexpectedly strong performance brought the unemployment rate down to a four-year low of 7.7% of the workforce.
The jobs figure was well above most analysts’ expectations and continued a recent surge that began in July.
Weekly benefits data registered a sharp but short-lived jump in the number claiming unemployment benefits in the states ravaged by the storm last month.
“Our analysis leads us to conclude that Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November,” said John Galvin, acting commissioner at the Bureau of Labour Statistics (BLS), which produced the jobs report.
The jobs survey data for the individual states – which can be used by analysts to determine what effect, if any, the storm had – will not be released until 21 December.
Wobbly confidence
Stock markets gave the figures a cautiously positive response, with both the Dow Jones and S&P 500 indexes rising 0.3% at the start of trading on Wall Street.
European shares, which had been down for the day following a cut in the Bundesbank’s growth forecast for Germany, jumped about 0.5% on the news.
The US Federal Reserve is due to meet next week to decide whether to expand the central bank’s policy of buying up debt from the markets in order to stimulate the recovery.
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US government bonds fell slightly in value following the data release, suggesting that markets have lowered the expectations for further intervention by the Fed in light of the strong jobs growth figure.
However, the Fed’s Open Market Committee will also have to weigh the latest consumer confidence survey, also released on Friday, which saw a sharp fall in sentiment in early December.
The University of Michigan’s consumer sentiment index fell to 74.5 from 82.7 the previous month, reaching a level normally associated with recession, although it was still well above the 55 registered at the depth of the 2008 downturn.
The drop in confidence among ordinary Americans may reflect the impasse in Congress in negotiations to avert the “fiscal cliff” of automatic spending cuts and tax rises that kicks in on 1 January.
Consumer sentiment briefly plummeted in 2011 when the US lost its top triple-A after a similar stand-off over the raising of the legal cap on the US federal government’s ability to borrow.
Mixed message
Although the latest jobs report beat expectations, this was in large part because expectations remain very low.
The number of jobs being added by the US economy since the recession ended has been far weaker than during previous economic recoveries, and has scarcely been enough to keep up with the natural growth in the US population.
The total number of people in employment has been stuck at about 58% of the US population since 2009, well down from the 63% level that characterised the boom years of the past decade, as many Americans have retired or given up seeking work.
Moreover, the relatively good news for November was offset by the BLS’s decision to downwardly revise the jobs figures for the preceding two months by a cumulative total of 49,000.
The October figure – which was originally reported just before the elections as 171,000, prompting some Republican supporters to suggest that the numbers had been manipulated – has been cut in the latest estimate to 138,000.
However, the reduction in the October figure was actually entirely due to public sector jobs cuts – mainly at the state and local government level – being 35,000 higher than originally estimated.
“While more work remains to be done, today’s employment report provides further evidence that the US economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression,” said Alan Krueger, chairman of the White House Council of Economic Advisors.
Dropping out
The unemployment rate – which fell to 7.7% in November, down from 7.9% in October – has fallen in fits and starts over the past three years, since peaking at 10% in late 2008, but still remains some way short of the 5% level that has accompanied periods of healthy growth in the past two decades.
The total number of unemployed people remained largely unchanged in the latest month at about 12 million, as did the number of people out of work for over half a year, at 4.8 million. The number of people taking part-time jobs because they cannot find full-time work also remained unchanged at 8.2 million.
Statistics suggest that much of the decline in the unemployment rate since 2008 has been due to people dropping out of the workforce, either due to retirement or because they have given up seeking work.
The unemployment figure only includes those actively seeking a job, and once people stop doing so they drop out of the statistics.
The retail sector continued to lead the way in job creation, with professional services and IT also providing large contributions, while the construction sector, food manufacturing and chemicals saw sizeable job losses.
BBC News – Business
