(CN) — American employers added just 210,000 jobs last month, indicating a slowdown in the pandemic recovery following a surge in hiring in October.
November’s payroll gains fell well below economist expectations of about 550,000 new jobs. Still, the unemployment rate dropped 0.4% to 4.2%, according to a Labor Department report released Friday morning.
“The underlying momentum of the labor market is still strong, but this month shows more uncertainty than expected,” said Nick Bunker, economic research director at Indeed Hiring Lab. “Of course, the omicron variant poses another major question mark. The impact of this new variant is unclear, so unfortunately we just have to wait and see.”
The recovery from the Covid-19 pandemic picked up steam in October, when the economy gained a revised 546,000 jobs after two months of disappointing growth. But the relatively small uptick last month marks the worst jobs report since December 2020, when the economy lost jobs amid a holiday season surge in infections.
The leisure and hospitality sector, which has been hit hardest by the coronavirus crisis, added only 23,000 jobs in November, a steep decline after a gain of over 160,000 the previous month. The industry, which includes restaurants, bars and hotels, is still down 1.3 million jobs compared to its pre-pandemic level.
“Not only did job gains in the sector slow down, but the average hourly earnings for production workers in the sector declined in November,” Bunker wrote. “It’s unclear whether this was due to a huge drop in demand for leisure and hospitality jobs, or the result of a big shift in the job mix. Either way, it’s strange.”
The biggest gains last month were seen in the professional and business services industry, which added 90,000 jobs. The transportation and warehousing sector added 50,000 positions, and is actually 210,000 jobs above its February 2020 level, a rarity in the pandemic economy.
The construction and manufacturing sectors each added 31,000 jobs in November, while retail lost 20,000 positions. Most other major industries showed little change in employment.
“This report is a tale of two surveys,” Bunker said. “The household survey shows accelerating employment gains, workers returning to the labor force, and low levels of involuntary part-time work. The payroll survey shows a significant deceleration in job growth, particularly in Covid-affected sectors."
President Joe Biden spoke about the jobs report Friday morning from the White House against a backdrop of Christmas decorations, reflecting on progress made throughout the year.
“Our economy is markedly stronger than it was a year ago, and today the incredible news that our unemployment rate has fallen to 4.2%,” he said in a hoarse voice. “At this point in the year, we’re looking at the sharpest one-year decline in unemployment ever. Simply put, America is back to work and our jobs recovery is going very strong.”
A reporter in attendance noted the president’s low voice and asked if he was OK.
“I’m OK, I have a test every day, a Covid test checking for all the strains,” Biden said. “What I have is a 1-and-a-half-year-old grandson who had a cold and who likes to kiss his pop. It’s just a cold.”
Friday’s report doesn’t capture the economic impact of the new omicron variant of Covid-19. The first confirmed case of the strain in the U.S. was reported in California on Wednesday, well after data for the report was compiled. Biden on Thursday said omicron was a “cause for concern but not panic” as he rolled out a plan to combat the spread of the coronavirus heading into the winter months.
Economic consultant Joel Naroff of Naroff Economics said the latest jobs report shouldn’t be seen as disappointing because it’s unrealistic to expect half a million new jobs each month.
“Is the job market losing steam? Absolutely not. Yes, the number of people added to the payrolls in November was less than expected. But it really should not have been a major surprise that hiring underperformed because there are labor shortages across the economy,” Naroff wrote.
He added, “And let’s not forget that these data are volatile. They bounce around like crazy. Yet the private sector added an average of 429,000 workers over the past three months. That is awesome.”
Looking ahead, Naroff predicted the pace of job growth will slow in 2022 but said that doesn’t mean the economy is getting weaker.
“The implication is that we should start setting our targets to more realistic levels and while we will get some really good job numbers over the next six to 12 months, we will likely trend back to a sustainable, full employment level of somewhere between 175,000 and 225,000 per month,” he said.
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