New York — November U.S. employment data delivered a faint ray of light to the economy Friday, as nonfarm payroll figures rose well beyond market expectations and the unemployment rate edged down to 7.7 percent from 7.9 percent.
The Department of Labor in Washington said that nonfarm payroll figures increased 146,000, above market expectations of 80,000 to 93,000 jobs. October figures, however, were revised downward from 171,000 to 138,000, Labor said. The unemployment rate edged down to 7.7 percent and the number of unemployed persons, at 12.0 million, changed little.
The better-than-expected figures lifted the stock market, which had been lower before the report. DJIA futures had been down 25 points before the report was released, but rallied to up 75 points within minutes. When trading opened on the New York Stock Exchange, the DJIA pulled back some but was still up around 25 points in late-morning trade.
Many analysts had expected that Hurricane Sandy’s devastating blow to the East Coast would affect the jobs markets in that region, because of the loss of infrastructure and damage to commercial facilities. But Labor said that effect hasn’t yet shown up. “Our analysis suggests that Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November,” according to a Department spokesman. |Labor will release the regional and state estimates on Dec. 21.
Many analysts said the fact that Sandy’s negative effects haven’t shown up more strongly so far is a good sign for the economy. Construction jobs and other economic activity related to the rebuilding in the states along the Atlantic seaboard will start showing positive jobs results.
Shawn Hackett, president of Hackett Financial Advisors, Inc., in Boynton Beach, FL, said the better jobs report shows that employment is not breaking down. He said rebuilding because of the damage from Sandy will “buttress the economy in the next couple of quarters. While not sustainable, it does help.”
Employment growth from Sandy’s damage will help carry the economic until the country’s economic matters are clearer from the fiscal cliff situation, Hackett said. A lot of economic decisions on private development and investment have been postponed until the rules are set in the tax and spending dispute, he said. “I think everyone has been waiting for the rules to be set,” he said. “Once we know what the rules are, we can adjust for it. ”
Some other analysts had the same viewpoint. “Once Washington policymakers resolve the near-term fiscal and other policy challenges that have undermined business confidence, we expect the pace of recovery, and job growth to begin to accelerate next year,” Lewis Alexander, chief economist at Nomura Securities in New York, told Reuters.
In a research note, Nomura also said the report “suggests that the underlying trend of the labor market has not gained momentum sufficiently yet to change the expected path of monetary policy.”
The Federal Reserve’ s open market committee, FOMC, is scheduled to meet next week to discuss monetary policy. Brown Brothers Harriman said in a research note that the employment figures alone won’t determine any Fed action. “The outlook for next week’s FOMC meeting never turned on one piece of high frequency data. It is still poised to increase its long-term asset purchases as Operation Twist runs down,” BBH said.
Terry Sheehan, economic analyst at Stone and McCarthy Research Associates in Princeton, N.J., said the overall report was much better than expected. “There is some good news,” said Sheehan. “Moderate growth is continuing.” She noted that Labor’s figures showed continued good growth in retail trade, in professional and business services and in health care.
Sheehan said there would be revisions but that they are not likely to be that significant, noting the Labor Department’s comments.
James Glassman, senior economist at JPMorgan Chase & Co. in New York, told Bloomberg radio that the pace of payroll growth “is too slow to make much of a dent into the pool of unemployed, but it’s steady and persistent. If you look into next year, there’s a lot of reasons why we should be expecting better.”
Since the beginning of this year, employment growth has averaged 151,000 per month, about the same as the average monthly job gain of 153,000 in 2011.
In November, employment rose in retail trade, professional and business services, and health care. Retail trade employment rose by 53,000 and has increased by 140,000 over the past three months. Employment in professional and business services rose by 43,000. Employment continued to increase in computer systems design and related services.
Health care employment continued to increase in November (+20,000), with gains in hospitals (+8,000) and in nursing care facilities (+5,000). Health care has added an average of 26,000 jobs per month this year.
On Thursday, the Labor Department had reported that U.S. initial jobless claims fell 25,000 to 370,000 in the week ending Dec. 1 from a revised 395,000 a week ago. The four-week moving average now stands at 408,000. Nearly all the rise in jobless claims from the landfall of Hurricane Sandy in late October appear to have reversed as the level of weekly claims at 370,000 is in line with the four-week moving average of 372,000 in the week ending Nov. 3, according to analysts at Barclay Capital.