By Shobhana Chandra - Dec 2, 2011 8:36 PM GMT+0700
Unemployment in the U.S. unexpectedly dropped in November to a two-year low, while employers added fewer workers than projected and earnings eased, indicating the labor market is making limited progress.
The jobless rate declined to 8.6 percent, the lowest since March 2009, from 9 percent, Labor Department figures showed today in Washington. Payrolls climbed 120,000, with more than half the hiring coming from retailers and temporary help agencies, after a revised 100,000 rise in October that was more than initially estimated. The median estimate in a Bloomberg News survey called for a gain of 125,000.
Companies like DirecTV (DTV) have said they will keep a tight rein on spending and employment in 2012, reflecting concern over the outlook for demand, Europe’s debt crisis and the U.S. deficit. The scant number of jobs is limiting wage gains and restraining consumers’ ability to boost spending, which accounts for about 70 percent of the economy.
“The labor market is showing very gradual progress, but it is progress,” Stephen Stanley, chief economist for Pierpont Securities LLC in Stamford, Connecticut, said before the report. “Things are getting a little bit better on the economy. Firms are hiring but staying trim.”
Bloomberg survey estimates ranged from increases of 75,000 to 175,000.
Stock-index futures maintained gains after the figures. The contract on the Standard & Poor’s 500 index expiring this month rose 1.3 percent to 1,259.6 at 8:33 a.m. in New York. The yield on the benchmark 10-year Treasury note rose to 2.13 percent from 2.09 percent late yesterday.
The unemployment rate, derived from a separate survey of households, was forecast to hold at 9 percent, according to the survey median. The decrease in the jobless rate reflected a 278,000 gain in employment at the same time 315,000 Americans left the labor force.
The labor participation rate declined to 64 percent from 64.2 percent.
Private hiring, which excludes government agencies, rose 140,000 after a revised gain of 117,000. It was projected to rise by 150,000, the survey showed.
Revisions to prior reports added a total of 72,000 jobs to payrolls in September and October.
Stanley estimates sustained gains of 125,000 a month on average are needed to keep the unemployment rate stable.
Factory Employment
Factory payrolls increased by 2,000, less than the survey forecast of a 9,000 increase and following a 6,000 gain in the previous month.
Employment at service-providers increased 126,000, including a 50,000 gain in retail trade at companies hired for the holiday shopping season. The number of temporary workers increased 22,300.
Macy’s Inc. (M), the second-biggest U.S. department-store chain, increased mostly part-time staff by 4 percent for the November-December shopping season. See’s Candies Inc., a chocolate maker owned by Berkshire Hathaway Inc., said it would add 5,500 mostly temporary workers.
Construction companies shed 12,000 workers. Government payrolls decreased by 20,000. State and local governments employment dropped by 16,000, while the federal government trimmed 4,000 positionss.
Average hourly earnings fell 0.1 percent to $23.18, today’s report showed. The average work week for all workers held at 34.3 hours.
Underemployment Rate
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 -- decreased to 15.6 percent from 16.2 percent.
The report also showed an increase in long-term unemployed Americans. The number of people unemployed for 27 weeks or more increased as a percentage of all jobless, to 43 percent from 42.4 percent.
The jobless rate has exceeded 8 percent since February 2009, the longest stretch of such levels of unemployment since monthly records began in 1948.
Federal Reserve Chairman Ben S. Bernanke and his colleagues last month cut economic growth forecasts for 2012 and said unemployment will average 8.5 percent to 8.7 percent in the final three months of next year, up from a prior range of 7.8 percent to 8.2 percent.
Fed’s Yellen
Growth in the U.S. and other advanced economies “has been proceeding too slowly to provide jobs for millions of unemployed people,” Fed Vice Chairman Janet Yellen said in a Nov. 29 speech in San Francisco. She called for “urgent” international action to combat a “dearth” of global demand.
Six central banks led by the Fed acted on Nov. 30 to make more funds available to lenders to preserve the global expansion. The move came after European leaders said they failed to boost the region’s bailout fund as much as planned, fueling concern about a possible breakup of the euro bloc.
The crisis in Europe and presidential election in the U.S. make it difficult to predict the level of economic expansion, causing DirecTV to “slow our growth rate,” Michael White, chief executive officer of the largest U.S. satellite-TV provider, said in an interview last week.
“We’re tightening our belts in terms of spending,” White said in the Nov. 21 interview. “We’ll cut back on overhead, hiring and programming.”
Payrolls may pick up as more businesses benefit from increased demand. Boeing Co. (BA), the largest U.S. aircraft maker, is hiring about 100 machinists a week as it boosts production by about 60 percent over three years to whittle down a backlog that now stretches to nearly 4,000 aircraft.
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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