The November jobs data was as ambiguous as a dessert pizza, which is to say, well – ambiguous.
Let’s start with the bad news: the economy added only 210,000 jobs in November, far less than the 550,000 jobs predicted and far less than the 546,000 jobs added the previous month. In fact, it is the weakest increase in employment since December of last year.
However, there is a catch.
Every month’s employment report is basically two items smashed together, much like a dessert pizza: an employer survey and a survey of household expenditures.
Moreover, while the employers survey (which revealed a significant underestimation of job growth) was a failure, the households survey revealed that 1.1 million more individuals were employed last month than in October, a significantly more positive picture of the labour market for the month.
In addition, the jobless rate fell to 4.2 percent in November from 4.6 percent in October. Given the more than 20 million jobs that were lost last spring, this is an incredibly positive figure.
As recently as February of this year, the impartial Congressional Budget Office anticipated that the United States would not reach an unemployment rate of 4.2 percent until 2024.
And what about that massive labour shortage that we can’t seem to get enough of? In addition, it appears to be getting better with time. The labor-force participation rate, which measures the proportion of persons who are employed or actively seeking employment, reached its highest level since March 2020. Americans between the ages of 25 and 54 (those in their prime working years) saw their share of the workforce increase by a half percentage point, bringing it closer to pre-pandemic levels.
Another piece of encouraging news is that the United States government has a dismal track record when it comes to getting these employment figures correct the first time around. Jobs created by the Bureau of Labor Statistics were undercounted by 626,000 employment from June through September. The Bureau of Labor Statistics undercounted jobs created by another 20,000 in October. As a result, we can anticipate further upward adjustments in the future.
Taking it all together, this mixed employment data should not alter the Federal Reserve’s calculus that controlling inflation, rather than stimulating economic development, is the central bank’s primary goal.