Employment: Surprisingly normal?AdvantageVoice® Blog—
Brian Jacobsen, Ph.D., CFA, CFP®, Chief Portfolio Strategist
Non-farm payrolls expanded by 146,000 in November, and the unemployment rate dropped from 7.9% to 7.7%. September’s and October’s non-farm payroll numbers were revised down a total of 49,000. I was expecting some impact from Hurricane Sandy since the household survey—which gives us the unemployment rate—was conducted the week of November 5, right after Sandy hit the East Coast (normally the survey is done the week of the 12th, but with an early Thanksgiving the Bureau of Labor Statistics (BLS) did the survey early). According to the BLS, the Hurricane didn’t seem to have any effect on the jobs numbers. Most of the jobs were created in the retail sector, while construction and manufacturing had losses.
The labor force did shrink in November, with the participation rate dropping to 63.6%. Therefore, the drop in the unemployment rate wasn’t necessarily a good thing, as it was driven by people dropping out of the labor market rather than jobs actually being created. Average hourly earnings did increase by 4 cents to $23.63, which is 1.7% higher than a year ago. Just for comparison’s sake, since the beginning of 2008, corporate profits are up 47.4% while employee compensation is up only 4.2%.
More than 4.8 million people that are still looking for work have been unemployed for 27 weeks or longer. That’s 40.1% of the unemployed. Approximately two million of the long-term unemployed are collecting emergency or extended unemployment benefits (the program that pays benefits beyond the normal 26 weeks). Those benefits could go away at the end of the year as one of the casualties of the fiscal cliff debate.
While the Employment Situation Report was surprisingly good, it was only close to normal—non-farm payrolls have been increasing at an average of 151,000 for the year.
The views expressed are as of 12-7-12 and are those of Chief Portfolio Strategist Brian Jacobsen, Ph.D., CFA, CFP®, and Wells Fargo Funds Management, LLC. The information and statistics in this report have been obtained from sources we believe to be reliable but are not guaranteed by us to be accurate or complete. Any and all earnings, projections, and estimates assume certain conditions and industry developments, which are subject to change. The opinions stated are those of the author and are not intended to be used as investment advice. The views and any forward-looking statements are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any mutual fund. Wells Fargo Funds Management, LLC, disclaims any obligation to publicly update or revise any views expressed or forward-looking statements.