Job Market Recovery Proceeds in Fits and Starts

Was this month’s jobs report good or bad? The answer is yes

Bus driver wearing protective mask
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The U.S. economy added fewer jobs in November than it had all year, but beneath the disappointing number were signs that the hiring recovery from the pandemic is still going strong.

Key Takeaways

  • The government’s November report on the labor market gave mixed signals about the state of the recovery from the pandemic.
  • The number of people on nonfarm payrolls grew at the slowest pace all year, and there are still 3.9 million fewer jobs than before the pandemic hit. 
  • Another measure showed employment growing more than it had in any month since October 2020.
  • Economists were encouraged by the 4.2% unemployment rate (down from 4.6% in October) and an uptick in the number of people working or actively looking for a job.

The number of nonfarm payrolls increased by just 210,000, less than half the growth seen in October or what economists had forecast, the Bureau of Labor Statistics said in its monthly report Friday. On the other hand, the unemployment rate fell to 4.2% from 4.6%, edging closer to the pre-pandemic level of 3.5%. Economists were also encouraged by the labor force participation rate, which was the highest it’s been since the pandemic began because 594,000 people left the sidelines and either got work or started looking for it.

"The headline suggests a disaster but the underlying data supports reason for cautious optimism,” said Matt Matigian, CEO of Blue World Asset Management.

While nonfarm payrolls grew at the slowest pace all year, another measure showed employment growing by 1.13 million jobs, the most since October 2020. That measure, from a monthly survey of U.S. households rather than businesses, includes agricultural workers and the self-employed, and is prone to more dramatic swings month to month.

For those tracking how fast we’re recovering the jobs lost in the pandemic, the slower growth in nonfarm payrolls is uninspiring—there are still 3.9 million fewer people working than before the pandemic hit, and it would take more than a year and a half to get those jobs back at the pace of the November report. But by other measures, the job market is just about as good as it’s ever been, at least if you’re looking to work rather than looking for a worker: Job-seekers have a near-record number of openings to choose from, and employees are enjoying record raises (though inflation has eaten into the value of those increases).

"The headline number is more of an outlier relative to the breadth of data out there,” said Michael O’Rourke, chief market strategist at Jones Trading. 

Most major sectors of the economy gained at least some jobs, with professional and business services leading the way with a pickup of 90,000 compared to October. The only exception was retail, which lost 20,000 jobs, mainly in clothing stores and general merchandise retailers.

One possible reason for the disconnect between the feeble nonfarm payroll growth and the stellar number derived from the household survey: people picking up “informal” work as unemployment benefits dwindled, Douglas Porter, chief economist at BMO Capital Markets, speculated in a commentary.

Economists found reason to be skeptical about the accuracy of the November figures, too, given that the Bureau of Labor Statistics has underestimated job growth in its recent reports, revising prior months’ job growth for six straight months (including adding 82,000 from September and October on Friday). On top of that, adjustments made to account for seasonal patterns have become hard to predict in the pandemic era, some economists said.

Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.

Additional reporting by
Medora Lee
Medora Lee
Full Bio
Medora Lee began covering the financial markets in 1992 and has interviewed U.S. Treasury secretaries and CEOs of Fortune 500 companies. Her work at outlets including Reuters, theStreet.com, and Forbes.com schooled her in stocks, commodities, and bonds and now she translates Wall Street for Main Street at The Balance.
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Article Sources

  1. Bureau of Labor Statistics. “Employment Situation Summary - 2021 M11 Results.” Accessed Dec. 3, 2021.

  2. Federal Reserve Economic Data. “Civilian Labor Force Level.” Accessed Dec. 3, 2021.

  3. Federal Reserve Economic Data. “All Employees, Total Nonfarm.” Accessed Dec. 3, 2021.

  4. BMO Capital Markets Economics. “Just Passing Through?” Accessed Dec. 3, 2021.

  5. Grant Thornton. “Huge Divide in Employment Data.” Accessed Dec. 3, 2021.