American Jobs figures exceeded forecasts last month, a possible sign that businesses are proving resilient through the devastation caused by Superstorm Sandy that slammed into the East Coast and disrupted that key area of the economy, and the uncertain political situation over the fiscal cliff. The unemployment rate, meanwhile, fell to 7.7%.
The U.S. added 146,000 new jobs last month, new Labor Department data shows. Government economists say the hurricane didn’t impede November’s tally. Last month’s figure fits with the labor market’s performance this year. The country had averaged a monthly gain of 151,000 this year. In the past three months, that figure was closer to 170,000. Another employment metric, which accounts for job hunters and those forced to work part-time, supported the headline figure total unemployed fell to 14.4% from 14.6% a month earlier.
Joblessness declined to the lowest point since December 2008. This was accompanied by a decline in the labor force; the labor force participation rate fell to by 20 basis points to 63.6%. Without this decline in the labor force, mostly the result of people halting the job search after Sandy, unemployment would not have fallen. As they return this morning, unemployment could return to nearer 7.9%.
Alan Krueger, chairman of the Council of Economic Advisers, which advises the president, said the report “provides further evidence that the US economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression. “It is critical that we continue the policies that are building an economy that works for the middle class.” A statement from the council said the economy had now added private sector jobs for 33 straight months, a total of 5.6 million. However, Krueger also warned “the monthly employment and unemployment figures can be volatile … it is important not to read too much into any one monthly report”.
The improvement in hiring bodes well for the holiday shopping season and indicates Americans will keep up the spending that makes up 70 percent of gross domestic product. Coupled with improvements in housing, the report indicates the economy will be better placed to weather federal budget cuts and tax increases that may occur next year even if lawmakers agree on reducing long-term budget deficits.
Another report today showed confidence among consumers fell more than forecast in December as Americans’ expectations slumped to a one-year low. The Thomson Reuters/University of Michigan preliminary consumer sentiment index decreased to 74.5, the weakest in four months, from 82.7 in November.
The drop in confidence among ordinary Americans may reflect the impasse in Congress in negotiations to avert the “fiscal cliff” of automatic spending cuts and tax rises that kicks in on 1 January.
Consumer sentiment briefly plummeted in 2011 when the US lost its top triple-A after a similar stand-off over the raising of the legal cap on the US federal government’s ability to borrow.
Although the latest jobs report beat expectations, this was in large part because expectations remain very low.
The number of jobs being added by the US economy since the recession ended has been far weaker than during previous economic recoveries, and has scarcely been enough to keep up with the natural growth in the US population.