November unemployment: Why the big drop?
Job seekers line up to apply for an opening with Major League Baseball's Miami Marlins on Nov. 15, 2011 in Miami, Fla.
Good news on jobs and no, that's not a typo. The Labor Department reported that 120,000 new jobs were added in November and the unemployment rate dropped to 8.6 percent, the lowest rate since March 2009. There was also a pleasant surprise in terms of the past two months: an additional 72,000 jobs were added in those months.
Why the big rate drop?
The new jobs-added numbers were good, but they don't explain the big drop in the unemployment rate. This is one of the more confounding parts of the data: there are two different surveys on which the Labor Department relies to determine the number of jobs added and the unemployment rate, so the two readings can sometimes seem at odds, as is the case in this report.
The drop in the unemployment rate comes with an asterisk: while there was a 278,000 gain in employment, there was a concurrent the labor force decline of 315,000 from October. It would be far preferable for the unemployment rate to drop because the economy is creating over 200,000 per month consistently, rather than due to would-be employees leaving the work force, either because they're retiring or they're simply too discouraged to keep looking for a job. If some of those people resume their job searches, we could see the unemployment rate tick up next month.
The bad news
8.6 percent unemployment is still a very high rate. In fact, the jobless rate has remained above 8 percent since February 2009, the longest stretch since monthly records began in 1948. Additionally, there are still 5.7 million long-term unemployed (jobless for 27 weeks and over), which represents 43 percent of the total unemployed and the average duration of unemployment rose to 40.9 weeks, the highest on record.
Also, of the 120,000 new jobs created, 50,000 came from the retail sector, which includes a number of employees added for the holiday season. The big question is whether those people will keep their positions beyond Christmas.
But for today, we should take the improvement and hope that a combination of mildly better than expected domestic news, plus some hope that the Europeans will reach a conclusion on the debt crisis, will deliver a holiday gift to the global economy.
November Jobs Report:
-- Jobs Created: +120,000 (October and September revised up by 72,000)
-- Private Sector Jobs Created: +140,000 (from +104,000 in October)
-- Government: -20K (Nearly 550,000 total government jobs lost since peak in September 2008)
-- Unemployment Rate: 8.6 percent (lowest rate since March, 2009)
-- Under-Employment Rate (marginally-attached, part-time): 15.6 percent (from 16.2 percent last month -- in 2007, the rate was 8 percent)
-- Total Number of Unemployed: 13.3 million (from 13.9 million)
-- Average monthly jobs gained in 2011: 132,000
-- Total Jobs Lost since beginning of recession in 2007: 6.2 million
-- Long-term unemployed (jobless for 27 weeks and over): 5.7 million representing 43 percent of the total unemployed (from 5.9 million)
-- Average duration of unemployment: 40.9 weeks, the highest on record
-- Average workweek: 34.3 (unchanged)
-- Average Hourly Earnings: down $0.2 to $23.18 (over past year, earnings up 1.8 percent)
For more analysis, listen to Jill's interview on the Marketplace Morning Report.