The U.S. labor-market rebound markedly slowed in November, indicating the surge in Covid-19 cases is hitting workers and curbing the broader economic recovery.
Nonfarm payrolls increased by 245,000 from the prior month, as the unemployment rate dipped 0.2 percentage point to 6.7%, according to a Labor Department report Friday. The data also showed a worrisome decline in Americans participating in the labor force — indicating people were leaving jobs or stopped looking for work.
The median estimates in a Bloomberg survey of economists called for a 460,000 gain in nonfarm payrolls and an unemployment rate of 6.7%. The payrolls figure reflected a decline of 93,000 temporary workers who had been hired for the decennial census.
The data raise the chances that President-elect Joe Biden will inherit an even weaker labor market next year, with the recovery at risk of stalling during the wait for widespread vaccine distribution. With almost 4 million Americans enduring long-term joblessness, the report may also help push Congress to pass new fiscal aid by year-end and could make Federal Reserve officials more inclined to provide new stimulus when they meet Dec. 15-16.
U.S. stock futures pared their increase after the report, while 10-year Treasury yields extended gains and the dollar fluctuated.
“You are seeing the impact of the pandemic surge here,” Jeffrey Rosenberg, senior portfolio manager at BlackRock Inc., said on Bloomberg Television. “The market reaction is really looking through this to the policy response.”
The employment report is a mid-month snapshot, so jobs lost amid new restrictions and lockdowns put into place in the weeks since won’t be reflected until December’s data.
The shift to online shopping this holiday season was especially evident in the data. Transportation and warehousing added 145,000 workers — the most since 1997 — while retail employment fell by 34,700, reflecting less seasonal hiring than normal in some sectors.
Leisure and hospitality jobs rose by 31,000 following a 270,000 gain in October.
Though effective vaccines could be rolled out as soon as this month, economic headwinds are likely to keep mounting before Biden’s Jan. 20 inauguration. The virus is raging uncontrolled with more than 1 million new cases each week, jobless benefits run out soon for millions of Americans, and some federal protections for renters and homeowners are due to expire.
And while prospects are growing for lawmakers to approve another stimulus package by year-end, it’s unclear whether negotiations that have been unsuccessful for months could conclude with agreement.
The gain leaves employment 9.8 million below pre-pandemic levels, and many Americans have been jobless since losing work in March and April.
The ranks of the long-term unemployed, or those out of work 27 weeks or more, increased by 385,000 in November to 3.9 million, the most since 2013. The group makes up more than a third of the total unemployed.
–With assistance from Edith Moy, Jarrell Dillard, Henry Ren, Sophie Caronello, Vince Golle and Liz Capo McCormick.
By Reade Pickert (Bloomberg)