Surprising turnabout raises hopes for recovery; analysts remain wary
WASHINGTON – After long years of economic destruction that saw about 8 million American jobs disappear, the national payroll essentially stopped shrinking last month in an unexpected turn that raised hopes of a labor market recovery.
While most analysts had expected November’s job losses to top 100,000, the U.S. Labor Department said Friday that employers shed 11,000 jobs in November – the smallest number lost since the recession began in December 2007.
The nation’s unemployment rate dipped to 10 percent last month, down from 10.2 percent in October. The underemployment rate, counting part-time workers who want full-time jobs and laid-off workers who have given up their job hunt, also fell, from 17.5 percent in October to 17.2 percent.
Lending credence to the possibility of a turnabout, the Labor Department issued revised job-loss numbers for the previous two months. They showed the number of jobs lost was about 40 percent smaller than previously reported – to 139,000 for September and 110,000 for October.
The surprisingly good news gave a boost to President Barack Obama as he prepared to announce new efforts to stimulate job growth. And many economists saw the jobs reports as evidence that the deep labor market downturn is at or very close to bottom.
At the same time, analysts cautioned against reading too much into one month’s data. The report “is a blow to the real gloom-and-doomers,” said Larry Kantor, head of research at Barclays Capital. But he added, “I wouldn’t go too overboard.” For one thing, the drop in the unemployment rate in part reflected shrinkage in the nation’s total labor force. One reason for the shrinkage is believed to be discouraged workers giving up and not looking for jobs.
That’s likely to change now that the news has turned better. The double-digit unemployment rate – last seen in the early 1980s – is almost certain to climb back up as more people enter the labor force.
Moreover, just because layoffs have slowed sharply doesn’t mean employers are ready to make substantial hires. The American economy needs to generate at least 100,000 new net jobs a month to keep unemployment stable, and forecasters still don’t see that happening until spring at the earliest. Still, job losses have been declining steadily since peaking at 741,000 in January.
Obama, eager to show that his economic policies are taking hold, called it the best jobs report since 2007.
“I’ve got to admit, my chief economist, Christy Romer, she got about four hugs when she handed us the report,” Obama said in Allentown, Pa.
“But I do want to keep this in perspective,” Obama said. “We’ve still got a long way to go. … Good trends don’t pay the rent. We’ve got to actually grow jobs and get America back to work as quickly as we can.”
That won’t be easy. There were 15.4 million unemployed workers in November, and nearly 6 million of them jobless for six months or longer. Another 9.2 million are working part time only because their hours were cut or they couldn’t find full-time work.
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