November Unemployment: Why the big drop?

(MoneyWatch) 

Good news on jobs and no, that's not a typo. The Labor Department reported that 120,000 new jobs were added in November and the unemployment rate dropped to 8.6 percent, the lowest rate since March 2009. There was also a pleasant surprise in terms of the past two months: an additional 72,000 jobs were added in those months.

Why the big rate drop?

The new jobs added  numbers were good, but they don't explain the big drop in the unemployment rate. This is one of the more confounding parts of the data: there are two different surveys on which the Labor Department relies to determine the number of jobs added and the unemployment rate, so the two readings can sometimes seem at odds, as is the case in this report.

Unemployment falls: Is it really good news?

The drop in the unemployment rate comes with an asterisk: while there was a 278,000 gain in employment, there was a concurrent labor force decline of 315,000 from October. It would be far preferable for the unemployment rate to drop because the economy is creating over 200,000 per month consistently, rather than due to would-be employees leaving the work force, either because they're retiring or they're simply too discouraged to keep looking for a job. If some of those people resume their job searches, we could see the unemployment rate tick up next month.

The bad news

8.6 percent unemployment is still a very high rate. In fact the jobless rate has remained above 8 percent since February 2009, the longest stretch since monthly records began in 1948. Additionally, there are still 5.7 million long-term unemployed (jobless for 27 weeks and over), which represents 43 percent of the total unemployed and the average duration of unemployment rose to 40.9 weeks, the highest on record.

Also, of the 120,000 new jobs created, 50,000 came from the retail sector, which includes a number of employees added for the holiday season. The big question is whether those people will keep their positions beyond Christmas.

But for today, we should take the improvement and hope that a combination of mildly better than expected domestic news, plus some hope that the Europeans will reach a conclusion on the debt crisis, will deliver a holiday gift to the global economy.

November Jobs Report:

-- Jobs Created: +120,000 (October and September revised up by 72,000)

-- Private Sector Jobs Created: +140,000 (from +104,000 in October)

-- Government: -20K (Nearly 550,000 total government jobs lost since peak in September 2008)

-- Unemployment Rate: 8.6 percent (lowest rate since March, 2009)

-- Under-Employment Rate (marginally-attached, part-time): 15.6 percent (from 16.2 percent last month -- in 2007, the rate was 8 percent)

-- Total Number of Unemployed: 13.3 million (from 13.9 million)

-- Average monthly jobs gained in 2011: 132,000

-- Total Jobs Lost since beginning of recession in 2007: 6.2 million

-- Long-term unemployed (jobless for 27 weeks and over): 5.7 million representing 43 percent of the total unemployed (from 5.9 million)

-- Average duration of unemployment: 40.9 weeks, the highest on record

-- Average workweek: 34.3 (unchanged)

-- Average Hourly Earnings: down $0.2 to $23.18 (over past year, earnings up 1.8 percent)

[rozarfrazer]

The payrolls of the private sector increased, but we must faster growth to more Americans back to work.

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[bjoh249]

BTW, I voted for Obama in 2008, but now I have seen Obama's work and I have no intention of voting for that fraud ever again.

[sickolibreals]

bjoh249 I am so proud that you have woke up and are comitted not to vote for this man again. you did not explain or outline what it was obummer did or did not do to lead you to this choice but I am so glad it happened and I hope so many others think the same way and please do not change your mind. by the way these unemployment data is just cooking the books. There are several schedules on the Department of unemployment and the liberal media and obama adminstration use the numbers that reflect good for him but they are not the total picture or the whole picture. so he is once again lying to the American citizens. I can only hope you vote for a Republican candidate. In some cases I know that will be very hard but I have some information for you democrate voters. Before the late 70's the Dem party had so many charatristiccs like the republicans and then the left socialist and communist and every wierd left wing club joined the Dem. party highjacking the Dem party that at one time were loyal loving pledge saying God Beleiving Americans. Since then the party got taken away and is no longer the party of the good, it is the party of me me me me me me and mine. The good Democrats need to take their party back and kick all those crazys out. Even Unions used to be good pledge flag flying loyal Americans now they are whats in it for me and how can I sabotage anyone who is in my way. it is so sad. So vote Republican this time and work hard to get your party back. if you dont vote you are throwing your vote away and it will go to obama.

[bjoh249]

The big drop is because of Obama and the left wing media(the majority of media outlets in America)scrambling to get him a second term. A lot of the unemployment drop is due to seasonal hiring for the holidays. Notice how the economy was on the brink of a double digit recession before last month when retailers began hiring their temporary holiday help. Wait until january when most of these employees are laid off. Add to that the fact that a lot of people have given up looking, and the numbers really haven't changed much. I got my first job last month in over a year, but it is only supposed to be temporary for the holidays.

[oldman67]

Are they counting the people who just gave up trying to find a job?

[tsigili]

People who have lost their unemployment benefits, and have given up looking, removing them from the government figures. Add to that the temp holiday jobs, and the figures are very misleading, indeed.

[tsigili]

Entirely temporary, and totally misleading.

[RobAla]

Year after year, a host of temporary jobs are created around the Holiday Season - and they go away afterwords. I don't think this comes as a big shock to anyone.

[take_a_number]

Hey ruffiannd you seem to be a liberal sum it up for us.

[venusvegasvada]

"Average Hourly Earnings: down $0.2 to $23.18 (over past year, earnings up 1.8 percent)"

So the average person see's their buying power drop again. Not even keeping up with inflation (thanks to the Fed).

But the Rich are making more money than ever.

[hypnotoad72]

Talk about "redistribution of wealth"...

[longtree-2009]

could be just the seasonal hiring for the holiday season. then there are probably many that have stopped looking for work completely disillusioned with the current environment. thinking unemployment will remain around 9% for most if not all of 2012.

[hypnotoad72]

Agreed