U.S. Added 155000 Jobs in November – Unemployment at 3.7%

The Labour Department released its monthly hiring and unemployment figures for November on Friday morning, providing one of the better snapshots of the state of the American economy

■ 155,000 jobs were added last month. Economists had expected a gain of about 190000.

■ The unemployment rate remained at 3.7 %.

■ Average hourly earnings rose 0.2 % after growing by 0.2 % in October. The year-over-year gain is now 3.1 %.

The Takeaway

After a week when the stock market suffered from motion sickness and presidential tweets caused trade tensions to flare, a weaker-than-expected jobs report will do little to calm roiled nerves. But faulty forecasts do not mean that the labour market has suddenly stalled. For the 98th month in a row, employers increased payrolls, and monthly job gains are still averaging above 200000 this year.

“There’s been remarkably consistent growth in jobs and it’s at a high level,” said David Donabedian, chief investment officer of CIBC Private Wealth Management.

Snowstorms in the Midwest and raging wildfires in California may have distorted employment data in November. And Friday’s (December 7, 2018) figures are just the first of three estimates.

Nonetheless, the report is sure to fuel anxieties on some fronts. “I think people are really worried,” said Chris Rupkey, chief financial economist at MUFG, referring to the week’s developments. The monthly average number of people applying for unemployment benefits has also edged up recently, according to government data published on December 6, 2018.

“I can’t emphasize enough when employment claims start rising, that’s not a good sign,” Mr. Rupkey said. “And I don’t like the way some of the layoffs have increased.”

Slowing automobile sales were part of the reason General Motors said last month that it would idle five plants and cut about 14000 jobs in North America. In October, Ford announced plans to trim its work force.

The labour market is still mostly delivering. The unemployment rate as well as new claims for jobless benefits are at or near record lows. And, the average monthly increase in payrolls this year is larger than the growth of the adult population.

“People who are working in finance are looking at the stock market,” said Martha Gimbel, research director at the job-search site Indeed. “The typical worker just wants to find a good job with hours and rising wages.”

That search has been getting easier and easier.

Gartner, a research and consulting firm that conducts a quarterly survey of 20000 employees at companies valued at USD 100 million or more, found that most workers were extremely optimistic about their ability to find new jobs.

At the same time, years of sluggish wage growth and fewer opportunities for advancement have made some workers dissatisfied with their current employers.

“Employees who say they are willing to go above and beyond at work has declined,” said Brian Kropp, vice president for human resources at Gartner. One out of four employees used to say they were giving their work an extra oomph — something Gartner calls “discretionary effort.” Now, it is closer to one in six.

The reason, Mr. Kropp said, is simple: Workers are not being rewarded for their efforts. “One of the things we’ve seen is that it’s harder for employees to get promoted nowadays,” he said. In 2006, for example, it took an average of about two and a half years to get a promotion, compared with four and a half years today.

Fears about changing jobs have also eased, he said. Workers are more willing to take the risk of hopping to another employer in search of better compensation.

Ms. Gimbel said sectors that have had a particularly hard time hiring — like nursing and retailing — are now posting more full-time than part-time jobs, a sign that employers are struggling to find workers. “Even now,” she added, “at this point in the recovery, one of the fastest-growing jobs search terms on Indeed is people looking for ‘full-time work.’”

The labour shortage has also finally started benefiting workers who were hit hardest during the recession: minimum-wage earners, African-Americans, Latinos and Americans with fewer skills and less education.

Manufacturing: A bright spot, for now

Some of the strongest gains to payrolls this year have been in manufacturing — long a buttress of middle-class employment. Even before this month’s report, the Labour Department had estimated that the sector created nearly 300000 new jobs in the 12 months ending in October.

The scarcity of people with the training and skills to work in some factories has been a challenge, though.

At Western Building Products’ banana-shaped factory on the lip of the Menomonee River outside of Milwaukee, workers unloaded pallets of door jambs from a large white container truck this week. Elsewhere, employees sanded down doors that hung back-to-back on a moving conveyor belt, a smaller and less colourful version of the animated one found in Disney’s “Monsters, Inc.” factory.

 “If someone is here a year, they never leave,” said Mark Willey, president of Western, an employee-owned millwork. “Our problem today is just finding people who want to work, to show up on time and are willing to apply themselves.”

The company has 217 people on staff and expects to raise the total to 230 next year.

The average worker earns USD 16.95 an hour, Mr. Willey said, and gets a generous benefits package. Because the business is 100 % employee-owned, workers build up equity in the company after a year.

Western has used temporary agencies after failing to get enough applicants on its own, and employed inmates at a nearby correctional facility as part of a work-release program. “When they get released, we hire them,” he said. “Some we even hire while they’re still in.”

This has been a good year and the company is scouting locations to build a new factory, but Mr. Willey expects business to cool over the next couple of years. The shortage of competent workers, not only at factories like Western’s but also in construction, is slowing single-family home building at the same time that tariffs have bumped up the cost of materials, he said.

He pointed to the aluminium sills that ran along the bottom of doors, and the steel hinges bolted onto the sides.

This has been a good year and the company is scouting locations to build a new factory, but Mr. Willey expects business to cool over the next couple of years. The shortage of competent workers, not only at factories like Western’s but also in construction, is slowing single-family home building at the same time that tariffs have bumped up the cost of materials, he said.

He pointed to the aluminium sills that ran along the bottom of doors, and the steel hinges bolted onto the sides.

The Commerce Department recently reported that construction of single-family homes fell for the second month in a row in October.

Manufacturing and related sectors tend to be more susceptible to economic cycles and are particularly vulnerable to tariffs.

Mr. Rupkey of MUFG said that manufacturing had been one of the economy’s strongest segments in recent years. “You wonder how long that’s going to continue,” he said, referring to Mr. Trump’s trade policies.

The Federal Reserve

Friday’s December 7, 2018, report is unlikely to swaypolicymakers at the Federal Reserve when they meet on Dec. 18 and 19. Mostanalysts expect the central bank to raise its benchmark interest rates by aquarter-point, to a range of 2.25 to 2.5 %. It would be the fourth rateincrease this year.

www.nytimes.com