Unemployment Drops to Another Low; Payrolls Fall Short: November 29 – December 3

Hiring could not keep pace with the growth in manufacturing and service sector activity. Here are the five things we learned from U.S. economic data released during the week ending December 3. 


November’s payroll gains were rather meh. Nonfarm employers added a seasonally adjusted 210,000 workers in November, down from September’s and October’s payroll expansions of 379,900 and 546,000, respectively. (Following recent payrolls data trends, September and October saw upward revisions totaling 82,000.) Per the Bureau of Labor Statistics, nonfarm payrolls remained 3.912 million under their February 2020 (pre-pandemic) peak. Private sector employers added 235,000 workers to their payrolls, split between 175,000 in the service sector and 60,000 in the goods-producing side of the economy. Industries adding the most workers in November were professional/business services (+90,000), transportation/warehousing (49,700), manufacturing (+31,000), and construction (+31,000). Average hourly wages have risen 4.8 percent over the past year to $31.03.

Meanwhile, the separate household survey puts to unemployment rate to another pandemic low of 4.2 percent (down 4/10ths of a point from October as this survey found the number of employed people growing by 1.1 million). 594,000 people entered the labor force during the month, with the labor force participation rate growing by 2/10ths of a point to 61.8 percent (adults 25-54: 81.8 percent, also up 2/10ths of a point). The median length of unemployment swelled by 7/10ths of a week to 12.7 weeks. Dropping to new pandemic lows were the number of part-time workers seeking full-time work (4.286 million) and the broadest measure of labor underutilization (the U-6 series to 7.8 percent).

Factory orders rose in October. The Census Bureau reports that new orders for manufactured goods jumped 1.0 percent to a seasonally adjusted $522.1 billion. Orders through the first ten months of 2021 were 17.1 percent ahead of the comparable 2020 months. While durable goods orders slowed 0.4 percent, they grew for nondurables (+2.4 percent), nondefense goods (+1.6 percent), and civilian nonaircraft capital goods (+0.7 percent). Shipments jumped 2.0 percent to $523.4 billion and were over the first ten months of 2021 up 12.7 percent from a year earlier. Durable goods shipments grew 1.6 percent, while nondurables advanced 2.4 percent. Unfilled orders rose for the ninth straight month, up 0.3 percent to $1.250 trillion and inventories expanded 0.8 percent to $764.2 billion. 

Purchasing managers reported increased manufacturing activity in November. The Institute for Supply Management’s Manufacturing PMI added 3/10ths of a point during the month to a reading of 61.1. The Manufacturing PMI has been above a reading of 50.0 (the threshold between an expanding and contracting sector) for 18 consecutive months. Rising were measures tied to new orders, production, and employment, while the inventories index slipped in November. Thirteen of 18 tracked manufacturing sectors expanded during the month, led by apparel, furniture, and electrical equipment/appliances. The press release noted that “[m]eeting demand remains a challenge” for many companies due to difficulties recruiting and retaining workers. 

They indicated that the service sector also surged. The Services PMI, also from the Institute for Supply Management, jumped by 2.4 points in November to a record-high reading of 69.1. Like above, the Services PMI has been above the critical 50.0 threshold for 18 straight months. Indices for business activity/production, inventories, and employment rose during the month, while the new orders measure held steady. All 18 tracked service sector industries expanded in November, led by real estate, transportation/warehousing, and retail. The press release notes that “capacity constraints, shortages of labor and materials, and logistical challenges” have led to supply issues and “demand-pull inflation.”

Another measure of consumer sentiment wobbled in November. The Conference Board’s Consumer Confidence Index declined by 2.1 points during the month to a seasonally adjusted 109.5 (1985=100), its lowest point since February. The current conditions index lost three full points to 142.5, while the expectations index shed 1.4 points to 87.6. Only 17.0 percent of consumers characterized current business conditions as “good,” while 29.0 percent see them as “bad.” 58.0 percent of consumers reported that jobs were “plentiful,” more than five times that said that jobs were “hard to get.” The press release noted that “concerns” about inflation and COVID variants drove the “slight decline in confidence.”

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending November 27, 2021, First-Time Claims, seasonally adjusted): 222,000, +28,000 vs. the previous week, -497,000 vs. the same week a year earlier). 4-week moving average: 238,750 (-67.5% vs. the same week a year earlier). 
  • Construction Spending (October 2021, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.598 trillion (+0.2% vs. September 2021, +8.6% vs. October 2020).
  • Pending Home Sales (October 2021, Index (2001=100), seasonally adjusted): 125.2 (+7.5% vs. September 2021; -1.4% vs. October 2020).
  • FHFA House Price Index (September 2021, Purchase-Only Index, seasonally adjusted): +0.9% vs. August 2021, +17.7% vs. September 2020.
  • Case-Shiller House Price Index (September 2021, National Index, seasonally adjusted): +1.0% vs. August 2021; +19.5% vs. September 2020.
  • Beige Book

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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