Comments on November Employment Report

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by Calculated Risk on 12/03/2021 09:19:00 AM

The headline jobs number in the November employment report was below expectations, however, employment for the previous two months was revised up by 82,000. The participation rate and employment-population ratio both increased, and the unemployment rate decreased to 4.2%.

Leisure and hospitality gained 23 thousand jobs in November. In March and April of 2020, leisure and hospitality lost 8.22 million jobs, and are now down 1.33 million jobs since February 2020. So, leisure and hospitality has now added back about 84% all of the jobs lost in March and April 2020.

Construction employment increased 31 thousand, and manufacturing also added 31 thousand jobs.

State and Local education lost 16 thousand jobs, seasonally adjusted. This accounted for over half of the 25 thousand public sector jobs lost in November.

Earlier: November Employment Report: 210 thousand Jobs, 4.2% Unemployment Rate

In November, the year-over-year employment change was 5.8 million jobs.

Permanent Job Losers

Click on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the report today. (ht Joe Weisenthal at Bloomberg).

This data is only available back to 1994, so there is only data for three recessions.

In November, the number of permanent job losers decreased to 1.921 million from 2.126 million in October.

These jobs will likely be the hardest to recover, so it is a positive that the number of permanent job losers is declining fairly rapidly.

Prime (25 to 54 Years Old) Participation

Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The prime working age will be key as the economy recovers.

The 25 to 54 participation rate increased in November to 81.8% from 81.7% in October, and the 25 to 54 employment population ratio increased to 78.8% from 78.3% the previous month.

Both are still low, compared to the pre-pandemic levels, and indicate that many prime workers have still not returned to the labor force.

Seasonal Retail Hiring

Typically, retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.

This graph really shows the collapse in retail hiring in 2008. Since then, seasonal hiring had increased back close to more normal levels. Note: I expect the long-term trend will be down with more and more internet holiday shopping.

Retailers hired 332 thousand workers Not Seasonally Adjusted (NSA) net in November.

This was somewhat lower than normal, and seasonally adjusted (SA) to a loss of 20 thousand jobs in November.

Part Time for Economic Reasons

From the BLS report:

“The number of persons employed part time for economic reasons, at 4.3 million, changed
little in November. These individuals, who would have preferred full-time employment,
were working part time because their hours had been reduced or they were unable to find
full-time jobs. This figure was about the same as in February 2020.”

The number of persons working part time for economic reasons decreased in November to 4.286 million from 4.423 million in November. This is back to pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 7.8% from 8.3% in the previous month. This is down from the record high in April 22.9% for this measure since 1994. This measure was at 7.0% in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 2.190 million workers who have been unemployed for more than 26 weeks and still want a job, down from 2.326 million the previous month.

This does not include all the people that left the labor force.

Summary:

The headline monthly jobs number was below expectations; however, the previous two months were revised up by 82,000 combined. And the headline unemployment rate decreased to 4.2%. The household survey indicated a large gain in employment of 1.136 million, and that led to a sharp decrease in the unemployment rate and an increase in the employment-population ratio.

The prime age participation rate and employment-population ratio, are still below pre-pandemic levels, indicating a number of prime workers are still out of the labor force. And there are still 3.9 million fewer jobs than prior to the recession.