WASHINGTON: The US unemployment rate fell in November to a nearly four-year low and job growth picked up, showing just modest improvement in the economy, government data released Friday showed.
The jobless rate dropped to 7.7 per cent, its lowest level since December 2008, mainly due to people leaving the workforce, from 7.9 per cent in October, the Labor Department said.
The US economy added 146,000 jobs in November, but the department revised lower the previous two months’ readings: October to 138,000 and September to 132,000.
The three-month average of 139,00 net new jobs remained well below the roughly 250,000 pace needed on a sustained basis to significantly reduce unemployment.
“The November payroll gain was in line with the current trend and suggests the labor market has shown no sizable change in conditions over the last 11 months,” Briefing.com analysts said.
Superstorm Sandy, which pummeled the northeastern coast in late October and early November, had less of an effect than expected. Analysts on average had forecast the jobless rate would rise to 8.0 per cent and that 90,000 net jobs were created.
Superstorm Sandy “did not substantively impact” the data, the department said.
President Barack Obama’s economic adviser said the jobs report provided further evidence the economy was continuing to recover from the severe 2008-2009 recession.
“Over the last 12 months, the unemployment rate has decreased by 1.0 percentage point as a result of growing employment, and the labor force participation rate has been essentially unchanged,” said Alan Krueger, chairman of the president’s Council of Economic Advisers.
The private sector created 147,000 jobs, while government employment fell by 1,000.
The massive US services sector accounted for all the job growth in November, adding 169,000 jobs, including almost 53,000 in the retail trade.
Analysts attributed the retail gain to an earlier than usual Thanksgiving holiday that kicked off the year-end shopping season.
The goods-producing sector shed 22,000 jobs, led by a decline of 20,000 in construction while manufacturing lost 7,000.
“We are unlikely to see much more improvement in coming quarters since the uncertainty surrounding the fiscal cliff and government policies is likely prompting many employers to hold off on staffing moves,” said Sophia Koropeckyj of Moody’s Analytics.
The fast-approaching “fiscal cliff,” the combination of sharp federal government tax increases and spending cuts due in January, has kept businesses cautious about adding jobs.
Concerns are rampant that politicians will fail to find a compromise on longer term budget-deficit reduction to avoid the shock that economists say will jolt the economy back into recession.
“The better-than-expected report doesn’t alter the view that the economy is grinding out just moderate job gains, as businesses continue to worry about the uncertain outlook for fiscal policy,” said Sal Guatieri of BMO Capital Markets.
“Despite the further drop in the unemployment rate, the Fed will likely announce new stimulus measures next week,” he said.
The central bank will hold its last policy-setting Federal Open Market Committee meeting of the year on Tuesday and Wednesday.
Fed Chairman Ben Bernanke has highlighted that the unemployment rate remains “well above” what Fed officials want to see, justifying maintaining a loose monetary policy.
The FOMC is expected to push ahead with more outright bond purchases to push down long-term interest rates when it meets.