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Hurricane Sandy apparently had only a minimal
effect on employment figures last month, helping overall job gains
to come in ahead of expectations at 146,000. The BLS reported that
their internal analysis indicates there was no "substantive" impact
of the storm on the jobs report, which would imply that underlying
job growth last month was basically spot on the trend over the last
three, six and twelve months, and the pace of job creation remains
somewhat slow but remarkably steady. Other headline figures from
the establishment survey were reported in line with expectations,
as the average workweek was unchanged at 34.4 hours and average
hourly earnings increased 0.2%. The increase in wages was better
than last month's flat reading, though on a trend basis earnings
growth remains soft, and wages are up only 1.7% over a year ago.
The key number from the household survey also beat expectations, as
the unemployment rate fell two ticks to an expansion-low 7.7%. The
good news on the unemployment rate was tempered by some of the
details of the household survey which looked less robust: the
participation rate fell 0.2%-point, reversing October's gain, the
employment-to-population ratio edged back down a tick, and the
household measure of employment fell 122,000. Even so, the overall
message from today's report should ease concerns that the heating
up of the fiscal cliff debate could lead to a pullback in business
activity. With that debate ongoing it's obviously too soon to say
that fiscal uncertainties aren't impairing economic activity (as
the Michigan sentiment survey may suggest) but the hard data thus
far point to an encouraging resilience in private sector behavior.
The November jobs report was better than expected, but not so good
that it will cause the Fed to re-think their push for faster growth
-- we continue to anticipate an announcement at next week's FOMC
meeting of a continuation of asset purchases at an $85bn/mo pace
after the year-end expiration of Operation
Twist.
Private employment last month increased 147,000
and government employment slipped 1,000. Government employment in
October was revised down sharply, bringing the revised October jobs
number to 138,000, down significantly from the initially-reported
171,000 gain. September was revised down by 16,000 to 132,000. By
industry, the stand-out performer last month was retail trade,
where jobs increased 53,000. Over the last three months retail
employment was up an impressive 140,000. After surging in 2010 and
2011, factory employment continues to languish, declining 7,000
last month and essentially flat over the last six months.
Construction employment tumbled 20,000 last month. We would not
blame this fall on Sandy, as only a very small share of
construction activity occurs in the Northeast, and given that the
sample period came two weeks later, the storm could have actually
generated some activity for trade contractors. More broadly,
construction employment is actually down modestly on a year-ago
basis, which seems at odds with the rebound in homebuilding. Part
of this puzzling disconnect can be explained by the fact that
construction employment in the downturn didn't fall by as much as
construction activity (i.e. construction productivity fell) and so
some rebound in activity can be experienced without a pick-up in
employment, as construction productivity returns to old levels. The
average workweek was unchanged last month at 34.4 hours, though the
industry detail indicates that on an unrounded basis the workweek
actually edged up a touch, another fact that is at odds with a
large Sandy effect. Average hourly earnings rose 0.2% in November
after contracting modestly in October.
The unemployment rate rounded down to 7.7%
(7.746%), and the major household survey details basically took a
round-trip from between September and November, as the increase in
the participation rate and the employment-to-population ratio seen
in October basically reversed themselves last month. In November,
there were declines reported in the size of the labor force
(-350,000), employment (-122,000) and unemployment (-229,000). As
with the household survey, there is little evidence that Sandy
materially impacted the numbers. The number of persons not at work
due to bad weather jumped 345,000 last month, though keep in mind
that these individuals are counted as employed -- just unable to be
at work due to weather disturbances. Moreover, the number of
part-time workers declined as did the ranks of those unemployed
because of a temporary layoff, both facts that run counter to a
significant Sandy effect.
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