The jobless rate dips to 10% as U.S. employers shed far fewer jobs than expected last month
By Timothy R. Homan
(Bloomberg) — Employers in the U.S. cut the fewest jobs in November since the recession began and the unemployment rate unexpectedly fell, signaling the recovery is lifting the labor market out of the worst employment slump in the post-World War II era.
Payrolls fell by 11,000 workers, less than the median estimate of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The jobless rate declined to 10%.
The Obama administration, under pressure after almost half of the 7.2 million jobs lost during the recession occurred since the president's inauguration, is considering additional measures to boost job growth. Ben S. Bernanke, chairman of the Federal Reserve, has pledged to maintain record-low interest rates until joblessness subsides, even as a recovery takes hold.
"We're getting closer to the point where companies will need to hire back workers," Joseph LaVorgna, chief U.S. economist at Deutsche Bank (DB) Securities in New York, said before the report. "We're going to see an improvement in hiring just because firms have cut so much."
Stock futures rallied and Treasury yields rose after the report. Futures on the Standard & Poor's 500 Index expiring this month added 1.3% to 1,112.5 at 8:36 a.m. in New York. The yield on the government's 10-year note increased to 3.47% from 3.39% late yesterday.
Revisions added 159,000 from payroll figures previously reported for October and September. The October reading was revised to show a 111,000 drop in jobs compared with an initially reported 190,000 decline.
Payrolls were forecast to decline 125,000, according to the median estimate of 82 economists surveyed by Bloomberg News. Estimates ranged from decreases of 30,000 to 180,000.
The jobless rate was projected to hold at 10.2%. Forecasts ranged from 9.9% to 10.4%.
The smaller-than-expected decline in payrolls was accompanied by gains in hours worked, wages and staffing at temporary employment agencies, signs companies may soon begin to hire full-time workers.
The number of temporary workers increased 52,000 in November, the biggest since October 2004 and the fourth straight rise. Payrolls at temporary-help agencies often turn up before total employment because companies prefer to see a steady increase in demand before taking on permanent staff.
Work Week Rises
The average work week grew to 33.2 hours in November from 33 hours, the biggest rise since March 2003. Average weekly earnings rose to $622.17.
Some companies are adding workers. Infosys (INFY)Technologies, India's second-largest software exporter by revenue, plans to add 1,000 employees in the U.S. in the next four to five quarters, said Chief Financial Officer V. Balakrishnan.
Government adjustments subtracted 91,000 jobs from the unadjusted November payroll number, about in line with the historical figure. This indicates the seasonal adjustment issue may not have played much of a role in last month's data.
Today's report showed factory payrolls fell 41,000 after decreasing 51,000 in the prior month. The median forecast by economists called for a drop of 45,000. The decline included a drop of 6,300 jobs in auto manufacturing and parts industries.
Sales of cars and light trucks increased for a second consecutive month in November after plunging in the wake of the government's so-called cash-for-clunkers incentive plan. Vehicles sold at a 10.9 million annual pace last month, up from a 10.5 million rate in October.
Payrolls at builders declined 27,000 after falling 56,000. Financial firms decreased payrolls by 10,000 for a second month.
Service industries, which include banks, insurance companies, restaurants and retailers, added 58,000 workers after adding 2,000. Retail payrolls decreased by 14,500 after a 44,200 drop.
Angela Renee Elliott, a 40-year-old accountant and bookkeeper from Wyoming, Ohio, said she's sent between 100 and 150 resumes after losing her job in April. This is the first time she's been unemployed in her 17-year career.
"I'm feeling pretty good and have seven interviews" already completed or planned, Elliott said in an interview, after posting her resume online on Nov. 21. "I believe I'm going to have a full-time. I'm keeping my fingers crossed."
Even so, "it's going to get worse before it gets better," she said of the national job market and economy.
Government payrolls increased by 7,000 after a 46,000 rise in the prior month.
The so-called underemployment rate — which includes part- time workers who'd prefer a full-time position and people who want work but have given up looking — fell to 17.2% from 17.5%.
Economists surveyed by Bloomberg last month projected the jobless rate will exceed 10% through the middle of next year even as the economy expands 2.6% in 2010.
The U.S. economy expanded last quarter for the first time in a year, growing at a 2.8% pace as government incentives spurred consumers to spend more on homes and automobiles.
Some companies such as Harley-Davidson (HOG) are among those continuing to trim staff to wring out additional cost savings and stem losses. The biggest U.S. motorcycle maker yesterday approved a restructuring plan at its largest plant, in York, Pennsylvania, which will result in the loss of about 950 union jobs.
"A restructured York operation will enable the plant to be competitive and sustainable for the future, and the new labor agreement is critical," Chief Executive Officer Keith Wandell said in a statement. The Milwaukee-based manufacturer is cutting costs after nine straight quarterly losses.
To contact the reporter on this story: Timothy R. Homan in Washington at email@example.com