Surprising was largely the sentiment when it comes to this month’s employment report. The economy added 146,000 jobs in November, and the unemployment rate fell to 7.7 percent. While it is the lowest unemployment rate since December 2008, it fell mainly due to workers leaving the labor force. Most economists had predicted much lower job numbers and a rising unemployment rate, anticipating effects from Superstorm Sandy and worries over the impending “fiscal cliff.” However, the Labor Department analysis suggests Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November.
Details Behind the Numbers
The Labor Department did revise job gain numbers lower for September and October, subtracting 49,000 jobs from the 2012 total. Most of the revisions originated from state and local education. Professional business services added 43,000 workers last month, largely led by increases in computer systems design and related services. Retail trade employment rose by 53,000 in November and has increased by 140,000 over the past three months. Healthcare employment also continued to rise this month, adding 20,000 jobs mainly within hospitals (+8,000) and nursing care facilities (+5,000). Healthcare has added an average of 26,000 jobs per month this year.
On the Edge of a Fiscal Cliff?
Generally, the labor market continues to recover from the recession. Of the 8.8 million jobs lost, about 4.2 million still have not been added back. Contributing to the reluctance to hire is the issue of the fiscal cliff. Whether the “so-called” fiscal cliff is worthy of the hype is a subject of debate among economists. However, most agree the concern and fear surrounding the event is affecting slower hiring levels. Many organizations are reluctant to invest in new hires until after the New Year and a conclusive resolution emerges. In fact, a survey conducted by the Institute of Supply Management showed U.S. manufacturers have shed jobs citing uncertainty about taxes and government spending as reasons why business conditions were weaker. The ISM index unexpectedly contracted in November, falling to a three-year low of 49.5 from 51.7 in October.
Worker Confidence Shaken, but Remains High
Randstad’s monthly Employee Confidence Index decreased in November to 51.7, breaking a previous two-month climb in confidence. The Index finds workers showed growing uncertainty around the availability of new jobs and in the strength of the economy. However, the majority (59 percent) maintain strong levels of confidence in their employers’ future. While anxiety surrounding potential tax increases and the frailty of overseas’ economies remains, there are some very positive signs as we move towards the end of 2012. The retail holiday season has thus far exceeded activity, both in stores and online, than we saw in 2011. Consumers are also more confident than we’ve seen since early 2008, and the housing market is showing signs of recovery.