Joblessness Takes Surprise Upturn
The U.S. unemployment rate unexpectedly jumped to 6% last month, matching an eight-year high set in April, the Labor Department said Friday, suggesting the nation’s economic recovery remains fragile and job creation lackluster.
Overall, the economy lost 40,000 jobs in November, with particular weakness in manufacturing and retail. The report, which followed recent glimmers of economic vitality, raised new questions about the power of the current expansion.
“We need firms to start getting confident about the future and begin to rehire,” said Joel Naroff, an economic consultant in Holland, Pa. “Only then will the recovery reach full force.”
Major stock markets slipped after the employment news but had regained the lost ground by midafternoon.
Analysts said Friday that the report was disappointing but not expected to prompt a near-term change in interest rates. Many had forecast a more modest rise in the unemployment rate from its October level of 5.7%. The loss of payroll jobs was also a surprise, with many having predicted a modest gain.
“On balance, today’s economic data was much weaker than expected,” said Stan Shipley, senior economist at investment firm Merrill Lynch, noting that many of his peers had projected that the nation would generate 35,000 jobs last month.
The report suggested that the economy was growing at a sluggish 1% to 2% annual rate, he added.
The data provide “grim confirmation of the need for additional tax relief,” said Jerry Jasinowski, president of the National Assn. of Manufacturers.
Others lashed out at politicians for failing to extend the federal program of temporary unemployment insurance benefits by 13 weeks, a proposal that was endorsed by the Senate.
“The administration and the House leadership can partially redeem themselves by announcing immediately that extending and strengthening that program will be the first order of business when the new Congress convenes in early January,” said Wendell Primus, director of income security at the Center on Budget and Policy Priorities, a liberal think tank in Washington.
Despite the net decline of 40,000 jobs, the experience in large sectors of the economy varied markedly.
Retail employment slid by 39,000. Manufacturing cut 45,000 jobs, a sweeping pattern that affected autos, aircraft, electronics, fabricated metals and other industries.
Construction was flat. But service jobs expanded by 50,000, driven in part by gains in health care, engineering and auto repair.
Mortgage brokerages also reported job increases, fueled by refinancing activity.
Average hourly earnings grew 0.3% to $14.93, maintaining a growth trend that some considered hopeful.
The average workweek for private-sector employees held flat at 34.2 hours.
The net decline in 40,000 jobs was the largest since nine months ago, when companies eliminated 165,000 payroll jobs.
Complaints Friday were loudest in the manufacturing sector, which has lost jobs for 28 straight months.
“This latest uptick in unemployment, and especially the continuing hemorrhage of manufacturing jobs, underscores the pressing need for aggressive action to restore strong economic growth,” the manufacturers group’s Jasinowski said.
Some commentators interpreted the loss of 39,000 retail jobs in November as a troubling sign of weak hiring for the holiday season.
But others questioned whether the number was a fluke, or suggested that it could be explained by technology that reduces the need for workers.
“With the technology, it’s possible that they need less people to stock stores and sell goods,” maintained Edgar E. Peters, chief investment officer of PanAgora Asset Management in Boston, who believes a modest economic recovery is in progress.
Consumer spending -- fueled of late by low mortgage rates, refinancings and relatively high levels of employment -- has been a key to the nation’s economic recovery. Peters maintained Friday that consumer spending would hold up and that there was nothing in the jobless report to suggest otherwise.
Contrary to previous recoveries, which began with significantly higher levels of unemployment, the current expansion has not been expected to unleash a vast wave of hiring, economists said. Rather, companies have been trying to keep their payrolls lean. Moreover, the 6% rate of unemployment, although high compared with recent years, remains close to levels that once were viewed as full employment, after routine attrition and job changing are considered.
Although the jobless report disappointed many, most economists do not view the monthly labor numbers as a barometer of future economic activity.
“In general, I think people are comfortable with their jobs,” Peters said.
“An unemployment rate of 6% is not going to make anybody worried about losing their job. I think things are pretty normal, as far as ordinary Americans go.”
