November’s labor market data came in a lot better than market expectations, in line with the last two weeks positive indications in the initial jobless claims data. Initial jobless claims fell in the week to November 28 to 452k the lowest level since August ’08. The non-farm payrolls declined by 11k, versus market expectations of -120k and the unemployment rate edged down from 10,2% to 10%. Revisions added 159,000 from payroll figures previously reported for October and September. The October reading was revised to show a 111,000 drop in jobs compared with an initially reported 190,000 decline. Employees in the goods producing sector fell by 69k and in the service producing sector increased by 58k. Average workweek rose from 33 to 33,2 a very positive signal as employers expect are expected to increase hours for their current workers before hiring new ones. The indexes of aggregate weekly hours increased by 0,6 points, from 98,5 to 99,1, indicating that industrial production may have continued its recovery in November. Average hourly earnings were almost flat at USD18,74.
However, the labor market medium term outlook remains uncertain and a more sustained improvement is not expected in the short term. Some economists underlined that the November's improvement was due seasonal adjustment reasons and the fall in unemployment rate was due to a 291k decline in the size of the labor force. The participation rate fell to 65%, the lowest since recession began. Employers are not expected to return hiring until capacity utilization return to higher level (it was at 70,7% in October).
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