While the headline November payrolls print came in almost on top of expectations at 178K, vs consensus of 180K there were two big surprises in today’s report, one being the unemployment rate which plunged from 4.9% to 4.6%, well below the 4.9% expected, but the biggest negative surprise was that the Average hourly earnings in November dropped by 0.1%, far below last month’s 0.4% rise, and below the 0.2% expected with the annual increase growing by a far more modest 2.5% than the 2.8% expected.
The change in total nonfarm payroll employment for September was revised up from +191,000 to +208,000, but the change for October was revised down from +161,000 to +142,000. With these revisions, employment gains in September and October combined were 2,000 less than previously reported. Over the past 3 months, job gains have averaged 176,000 per month.
One red flag in the report was the 4,000 drop in manufacturing workers, worse than the -3,000 expected, and following last month’s -5,000 print. Also of note, workers unable to work due to bad weather according to the BLS were 19K in Nov. The historical average for Nov. is 72k employees cannot work due to poor weather conditions. Another 113k workers who usually work full-time could only work part-time due to the weather last month.
The reason for the steep drop in the unemployment rate is that while the number of employed rose from 151,925K to 152,085K, coupled with a decline in the number of unemployed by 387K, the number of people not in the labor force soared to 95.055 million, a new all time high, which in turn pressured the labor force participation rate to 62.7%, the lowest since June and just shy of the 30 year low.
But as noted above, the biggest surprise was the negative print in the average hourly earnings which declined by 0.1%, the first negative print in 2016 and the wrst print since 2014.
More details from the report:
Total nonfarm payroll employment rose by 178,000 in November. Thus far in 2016, employment growth has averaged 180,000 per month, compared with an average monthly increase of 229,000 in 2015. In November, employment gains occurred in professional and business services and in health care.
Employment in professional and business services rose by 63,000 in November and has risen by 571,000 over the year. Over the month, accounting and bookkeeping services added 18,000 jobs. Employment continued to trend up in administrative and support services (+36,000), computer systems design and related services (+5,000), and management and technical consulting services (+4,000).
Health care employment rose by 28,000 in November. Within the industry, employment growth occurred in ambulatory health care services (+22,000). Over the past 12 months, health care has added 407,000 jobs.
Employment in construction continued on its recent upward trend in November (+19,000), with a gain in residential specialty trade contractors (+15,000). Over the past 3 months, construction has added 59,000 jobs, largely in residential construction.
Employment in other major industries, including mining, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government, changed little over the month.
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in November. In manufacturing, the workweek declined by 0.2 hour to 40.6 hours, while overtime was unchanged at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.6 hours.
In November, average hourly earnings for all employees on private nonfarm payrolls declined by 3 cents to $25.89, following an 11-cent increase in October. Over the year, average hourly earnings have risen by 2.5 percent. Average hourly earnings of private-sector production and nonsupervisory employees edged up by 2 cents to $21.73 in November.
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