US employers slowed the pace of their hiring in November, creating 210,000 jobs, the least in nearly a year.
Friday’s report from the Ministry of Labor also showed that the unemployment rate fell sharply to 4.2% from 4.6%. This is a historically low level but still higher than the pre-pandemic unemployment rate of 3.5%.
Overall, November’s employment figures point to an economic recovery that appears resilient although threatened by soaring inflation, labor and supply shortages, and the potential impact of the Omicron variant of the coronavirus.
Definitely little is known about the variant and widespread business closures are considered unlikely. Still, Omicron could discourage some Americans from traveling, shopping, and dining out in the coming months and potentially slowing the economy.
For now, however, Americans are spending freely and the economy is expected to grow at an annual rate of 7% in the last three months of the year, a significant rebound from the 2.1% pace in the previous quarter. , when the Delta variant limped. growth.
Beneath the big numbers on hiring and unemployment, however, lurks a potentially even bigger question: Are more people who have lost their jobs due to the pandemic recession are finally coming out of the sideline to seek work again? Many more job seekers are needed to help businesses fill their vacancies and support economic growth.
This is also a critical issue for the Federal Reserve. If the proportion of people who have or are looking for a job does not increase much, that would suggest that the Fed is approaching its maximum employment target.
With inflation at a three-decade high and well above the Fed’s 2% annual target, meeting his tenure would increase pressure on President Jerome H. Powell to hike rates. ‘interest as soon as possible. This would make loans more expensive for many individuals and businesses.
Even though the unemployment rate has fallen steadily this year, the proportion of Americans who are working or looking for work has barely budged. A shortage of job seekers tends to limit hiring and force companies to pay more to attract and retain employees. A higher salary can help support spending and growth. But it can also fuel inflation if companies raise prices to offset their higher labor costs, which they often do.
One of the results is that there are now 4.7 million fewer people employed than before the pandemic. Yet only 1.7 million of them are actively looking for work and are classified as unemployed. The remaining 3 million are no longer looking for a job and are therefore not counted as unemployed. The government classifies people as unemployed only if they are actively looking for work.
About half of the 3 million people who left the workforce have retired. The other half are made up of parents, mostly mothers, who stayed home to care for children when schools and daycares closed. For some of these women, child care remains unavailable or unaffordable. Other people have become self-employed. And others continue to delay their job searches for fear of contracting COVID-19.
Economists differ on whether more people will resume their job searches soon. Julia Pollak, labor economist at ZipRecruiter, suggested that rising wages, near-record openings and falling unemployment provide encouraging signals for those still on the sidelines.
Other economists are less sure. Many of them expected more women to return to the workforce when schools reopened. This did not happen, suggesting that some mothers may have decided to stay home permanently.
And before COVID, many older Americans were coming out of retirement to take up jobs, often for social reasons or to keep busy. But with the coronavirus posing a particular threat to the elderly, far fewer retirees are returning to the workforce. With the emergence of the Omicron variant, this hesitation may persist.
Most indicators for the US economy in November were positive. Consumer spending has jumped, even outpacing inflation. Home sales rose in October at the fastest pace in January. A survey of purchasing managers at factories found new orders and production accelerated. There were even signs that supply chain grunts have eased a bit for some manufacturers.