The November jobs report was clearly a disappointment, and it's further evidence of the lagged nature of the employment situation. After the end of the last recession back in 1990-1991, the unemployment rate didn't peak for 15 months. A similar pattern seems to have emerged in the aftermath of last year's recession. Moreover, with the average monthly loss in jobs at 18,000 thus far this year, the three-month average of a 13,000 loss suggests that the November decline was hardly a watershed event, especially since the decline occurred in the midst of a so-called soft patch for the economy. The employment report, showing that the economy shed 40,000 jobs, looks odd when considering the recent data on initial jobless claims. Jobless claims have been falling steadily over the past two months and are now at a 21-month low. At 377,000, the four-week moving average is now well below the 400,000 threshold that generally marks the dividing line between gains and losses in the monthly jobs data. One possible explanation for the divergence could be the survey dates for the respective data. The survey date for the jobs data ended on Nov. 16, whereas the survey date for the latest jobless claims data was for the week ended Nov. 29. If this is, in fact, the main cause of the divergence, then future employment numbers should improve.
Factory Jobs Plunge Again
The weakness in the payroll report can be traced to a number of industries, but two were the most influential. Specifically, the retail sector was weak, with 39,000 jobs lost. Some of that was probably a result of reduced seasonal hiring and perhaps the late Thanksgiving holiday. If there are indeed fewer workers hired for the holidays, then fewer people will be let go in January, and that should help boost the January tally, all things being equal.