Nonfarm payrolls fell by only 11,000 last month while unemployment pulled back from 26-year highs, the Labor Department said Friday, signaling that jobs are about to the corner ahead of scheduled.
Stocks and Treasury yields shot up on the bullish economic news.
November’s jobs decline was the best performance since the payroll losses started in December 2007. Economists expected a loss of 125,000 jobs. Labor also said September and October job losses weren’t nearly as bad as previously thought. In November, service-related jobs actually rose, but factory and construction layoffs dragged the overall figure down.
Meanwhile, the unemployment rate fell to 10% from October’s 26-year high of 10.2%. Most economists expected no change. The jobless rate is derived from a separate household survey, which reported an increase of 227,000 jobs. The household jobs figure tends to be very volatile, but often will turn higher before payrolls do.
The jobless rate also fell because more people continued to exit the work force. That should change as labor markets improve. One big reason unemployment can stay stubbornly high is because discouraged workers moved back into the labor force.
Another sign of strength: The work week rose to 33.2 hours from a record-low 33 hours. Firms tend to boost existing staff’s hours before hiring themselves.
Friday’s jobs report might bolster consumer confidence at the height of the holiday shopping season. And a stabilizing job market could provide key support for the housing market, which has relied heavily on government efforts to prop up activity.
A key question going forward is how soon the Federal Reserve begins withdrawing its massive monetary stimulus. It’s already on a path to finish buying mortgage-backed securities by the end of Q1. And St. Louis Fed President James Bullard said Thursday that the central bank could raise rates even if unemployment remained high, according to a published report. But the Fed, which has repeatedly pledged to keep rates near zero for an “extended” period, will likely give plenty of warning.
Also, while November’s jobs report will be hailed on Wall Street and Main Street, the biggest cheers might be on Pennsylvania Ave.
Soaring unemployment had dragged down the approval ratings of President Obama and Congressional Democrats, who feared heavy losses in next year’s midterm elections. There has been increasing pressure, especially from the Democratic base, for government action to spur jobs. Hence Obama’s “jobs summit” Thursday, and talk on Capitol Hill of a $300 billion jobs bill.
If unemployment continued to rise into next spring, many pollsters said voters might have locked in their negative views of the economy and blame the party of power in November 2010. But if the jobs market really is turning the corner now, Americans’ view of their leaders might be a lot different by the time they head to the polls.
The improving jobs picture could boost the chances of a sweeping health care overhaul clearing Congress. Democrats won’t feel so compelled to focus on jobs and jobs-boosting legislation. More important, higher general approval ratings (or the prospect of higher ratings) might give Democrats a little more confidence that they can vote for the massive, controversial legislation and not lose their jobs in a year.
So Republican leaders who were starting to think they could simply walk into big victories next fall must be smiling through gritted teeth today.
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