US shrugs off Sandy, adds 146,000 jobs
Unemployment dips to 7.7%, the US economy's lowest jobless rate in four years.
WASHINGTON—It takes more than a superstorm to derail the US job market.
Employers added 146,000 jobs in November and the unemployment rate dipped to 7.7%, a four-year low, the government said.
Though modest, the job growth was encouraging because it defied disruptions from Superstorm Sandy and employers’ concerns about impending tax increases from the year-end “fiscal cliff.”
Analysts said the job market’s underlying strength suggests that if the White House and Congress can reach a budget deal to avoid the cliff, hiring and economic growth could accelerate next year.
A budget agreement would coincide with gains in key sectors of the economy.
Builders are breaking ground on more homes, which should increase construction hiring. US automakers just enjoyed their best sales month in nearly five years. And a resolution of the fiscal cliff could lead businesses to buy more industrial machinery and other heavy equipment. That would generate more manufacturing jobs.
“The ground is being prepared for faster growth,” said Nigel Gault, an economist at IHS Global Insight.
House GOP leader John Boehner said the two sides had made little progress in talks seeking a deal to steer clear of the cliff last week.
The White House, however, used the mixed jobs report as an argument to push President Barack Obama’s proposed tax-rate increases for top earners, public works spending and refinancing help for struggling homeowners.
Superstorm Sandy, contrary to expectations, dampened job growth only minimally in November, the government said. Job gains were roughly the same as this year’s 150,000 monthly average, and the unemployment rate fell two-tenths of a percentage point to its lowest level since December 2008.
That suggests that fears about the cliff haven’t led employers to cut staff, though they aren’t hiring aggressively, either. The economy must produce roughly twice November’s job gain to quickly lower the unemployment rate.
Employers added 49,000 fewer jobs in October and September combined than the government had initially estimated. Monthly job totals come from a survey of 140,000 companies and government agencies, which together employ about 1 in 3 nonfarm workers in the US.
And economists noted that the unemployment rate would have risen if the number of people working or looking for work hadn’t dropped by 350,000.
The unemployment rate is derived from a separate survey of about 60,000 households that are asked whether the adults have jobs and whether those who don’t are looking for one. Those without a job who are seeking one are counted as unemployed. Those who aren’t looking aren’t counted as unemployed.
All told, 12 million people were unemployed in November, about 230,000 fewer than the previous month. That’s still many more than the 7.6 million who were out of work when the recession officially began in December 2007.
For now, worries about the cliff have led some companies to cut back on purchases of heavy equipment. Consumers are also signalling concern. A survey of consumer sentiment fell sharply in December, economists noted, partly over worries that taxes could rise next year.
But a resolution of the cliff could accelerate job growth in the construction and manufacturing industries. Those sectors, on average, pay more than the retail and restaurant jobs that have helped drive hiring in recent months and tend to contribute more to economic growth.
Construction workers earned an average of $26 an hour in November. Factory workers averaged $24 an hour. Both far exceed the hourly average of $16.40 for retail employees and about $13.40 for hotel, restaurant and other hospitality workers.
“The good news is not that the labour market is improving rapidly—it isn’t—but that employment growth is holding up despite all the fears over the fiscal cliff,” Gault said.
He estimates that a budget deal would boost the economy’s average monthly job gains to about 200,000 next year.
One company that could step up hiring next year is Ahaus Tool & Engineering in Richmond, Ind., which makes assembly machines for the automotive and power-generation industries.
Kevin Ahaus, president of the 90-person company and the fourth generation of his family to run it, says the company had its best year ever in the 12 months that ended in September. But since October, sales have levelled off. Many customers are asking for bids but not closing deals, Ahaus said, because of the uncertain economic outlook.
That, in turn, is causing him to delay hiring.
“I probably won’t hire anybody until the first of the year because of all the unknowns out there,” he said.
Many analysts thought Sandy would hold back job growth significantly in November because the storm forced restaurants, retailers and other businesses to close in late October and early November.
It didn’t. In part, that’s because the storm struck the East Coast on Oct. 29—well before the government surveyed businesses about how many people were on their payrolls for pay periods that included Nov. 12.
Most people are paid every two weeks. So the pay period for the survey could have stretched as late as Thanksgiving week. As long as employees worked at least one day during a pay period, the survey counted them as employed.
Paul Ashworth, an economist at Capital Economics, noted that hiring by private companies was actually better in October than the government first thought. The overall job figures were revised down for October because governments themselves cut about 38,000 more jobs than was first estimated.
The rebound in housing is leading Georgia Pacific, a paper and wood products company, to hire. It is opening a new plant in South Carolina next year and is filling 140 jobs. So far, it’s received 2,400 applications.
The number of Americans who were working part time in November but wanted full-time work declined. And a measure of discouraged workers—those who wanted a job but hadn’t searched for one in the past month—rose slightly.
Those two groups, plus the 12 million unemployed, make up a broader measure that the government calls “underemployment.” The underemployment rate fell to 14.4% in November from 14.6% in October.
©The Canadian Press