Disappointing Job Growth in U.S. as Jobless Rate Hits 9.8%

A job applicant, left, speaks with a career consultant at the Workforce Alliance Career Center in West Palm Beach, Fla., this week.

In a jolting surprise to the economic recovery and market expectations, the United States economy added just 39,000 jobs in November, and the unemployment rate rose to 9.8 percent, according to the Department of Labor. November’s numbers were far below the consensus forecast of close to 150,000 jobs added and an unchanged unemployment rate of 9.6 percent.

More than 15 million people remained out of work last month, and 6.3 million of them have been unemployed for six months or longer.

Private companies, which have been hiring since the beginning of the year, added 50,000 jobs in November. Most of those increases came in the form of temporary help, where 40,000 jobs were added, and in health care, with an additional 19,000 jobs.

Retail jobs declined by 28,000 in November, while manufacturing, which had showed some strength earlier in the year, lost 13,000 jobs. Government jobs dropped by 11,000 in the month.

Included in the latest report were revisions from previous months. The agency now says that the economy added 172,000 jobs in October, instead of the 151,000 jobs previously reported. September was revised to a loss of 24,000 jobs from a loss of 41,000.

The anemic net gain in jobs came as economists had been gradually showing more optimism. Weekly initial unemployment claims have recently been trending lower, pending home sales in October topped forecasts and November retail sales jumped by one of their highest increases in years.

“Obviously this is a disappointing report, to say the least,” said James O’Sullivan, chief economist at MF Global. But he said he did not believe the recovery was actually derailed. “Certainly the weight of evidence is that the economy is improving, and labor data can be unreliable.”

Many risks remain for the economy. The latest numbers included 14,000 local government job losses, which could accelerate if legislatures and city councils are forced to prune further to deal with shrinking budgets and larger deficits. With President Obama’s deficit commission examining long-term spending cuts, unemployment benefits expiring and a Congressional fight over taxes looming, consumer spending, which has recently shown signs of life, could come under pressure. That, in turn, could cause businesses to reconsider hiring plans.

Advocates for the unemployed were shocked by the number.

“I’m still trying to get my jaw off the floor,” said Andrew Stettner, deputy director of the National Employment Law Project. “What it does is it kills the story that maybe I thought we could start telling, which was steady improvement. If we had four months in a row of improving jobs numbers, we would still need a lot of work to get back to full employment, but now it’s not even moving in the right direction.”

Analysts generally estimate that the economy needs to add at least 100,000 to 125,000 jobs a month simply to keep up with new entrants to the labor force. So if employers keep hiring at the current pace, it will not help reduce the unemployment rate for some time.

For those who have been searching for work for more than six months, this is a discouraging prospect. “I have looked high and low,” said Melissa Barone, who was laid off from a job in technical support 14 months ago. “I have a college degree and a ton of technical skills, but I can’t find a job.” Ms. Barone, 42, lives in St. Clair Shores, Mich., near Detroit, a particularly hard hit area. She has applied for hundreds of jobs but has yet to receive an offer.

If the economy is improving, that is news to Ms. Barone. “It doesn’t seem that way here,” she said.

By: Motoko Rich (NY times)