After businesses reported 546,000 new hires in October, many economists expected the same or even more in the following month. But despite the lower-than-expected number, economist Joel Naroff, president of Naroff Economics, says the numbers also show that the economy is still recovering and growing strongly.
“The issues in the labor market are likely more the result of a lack of workers than a slowdown in hiring,” Naroff told ConsumerAffairs. “Thus, seasonal hiring in the retail and hospitality sectors were less than expected. That should not have been a real surprise. In addition, health care and education were soft. This is a part of the economy where skilled workers are in extreme short supply, which appears to be limiting hiring.”
Naroff focuses on the unemployment rate. In November, it dropped sharply to 4.2%. He says that dip shows that people looking for work are finding it.
“The jobs numbers bounce around, but the expectation of 500,000 new people on the payrolls was and remains unrealistic given the lack of labor,” Naroff said. “Numbers in the 200,000 to 300,000 range seem to be more reasonable.”
Fewer people are out of work
The report shows that the number of unemployed persons didn’t increase last month. In fact, they fell by 542,000, to 6.9 million. In February 2020, just before the pandemic, the unemployment rate was 3.5%, with 5.7 million people out of work.
People looking for jobs in business and professional services last month had the best chance of being hired. That sector added 90,000 jobs in November.
With supply chain bottlenecks, the transportation and warehousing sector was busy, hiring 50,000 people last month. Demand for truck drivers remains greater than the number of people applying for those jobs.
On the flip side, retailers reduced their hiring, perhaps because they staffed up in September and October ahead of the holidays. The retail sector lost 20,000 jobs last month.
People who did get jobs last month earned slightly more money. Average hourly incomes in November increased by eight cents to $31.03. Over the past 12 months, average hourly earnings have increased by 4.8 percent.