November 2011 Employment Report

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According to the Bureau of Labor Statistics (BLS) non-farm payroll employment rose by 120,000 in November, and the unemployment rate dropped to 8.6 percent; the drop in the unemployment rate resulted primarily from 315,000 people giving up looking for work, however. Employment in the private sector was stronger (+140,000), especially in retail trade, leisure and hospitality, professional and business services, and health care. Government employment continued to trend down (-20,000), especially at the local level. The change in total non-farm payroll employment for September was revised from +158,000 to +210,000, and the change for October was revised from +80,000 to +100,000.
 

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There were several less-encouraging aspects to the report besides the number of people who had given up looking for work. For one, as we have been pointing out for quite some time, employment is converging with the previous peak at a slower pace than any prior recession going back to 1973.
 

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Also, the number of persons not in the labor force reached a new high of nearly 87 million. In addition, the ratio of employed persons relative to the total population (EPR) has barely budged off its February 2010 low; the EPR is at levels comparable to those seen in the late 1980s.
 

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The civilian labor force participation rate fell back to 64.0 percent, while the annual percentage increase in average hourly earnings of production and non-supervisory employees ticked higher to nearly 1.6 percent, barely above the historical low set back in February 2004. With the consumer price index for urban consumers rising at a 3.9 percent annual pace, wages are falling in real terms (i.e., wage increases are not keeping up with price inflation).
 

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On a somewhat brighter note, part-time employment fell by 378,000 jobs while full-time employment increased by a somewhat comparable 323,000. The trend for part-time employment appears to be stable to declining slightly; the full-time trend is solidly, although modestly, higher if viewed from January 2010.

In summary, then, although this employment report was not awful, neither does it portend strong economic growth.