By MOTOKO RICH
Published: December 3, 2010
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 number was nowhere near enough to help the large ranks of the unemployed, and was far below analysts’ consensus forecast of close to 150,000 jobs and an unchanged jobless rate of 9.6 percent. More than 15 million people remain out of work, and 6.3 million of them have been unemployed for six months or longer.
The monthly snapshot of the job market could lend more support to the suggestion by the Federal Reserve chairman, Ben S. Bernanke, that the government continue to stimulate the economy, as well as the Obama administration’s call for an extension of unemployment benefits. The apparent loss of hiring momentum may also fuel the debate over whether the government should take aggressive steps to reduce the deficit in the near term or wait until the economy returns to better health.
Vice President Joseph R. Biden Jr. called the weak November jobs report is “disappointing” and urged Congress to extend unemployment benefits and tax cuts for the middle class.
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. The number of people who were unemployed because they were laid off or because a temporary assignment ended increased by 390,000, while the number of people re-entering the labor force — after a period of not looking for work — was actually down by 61,000.
Private companies, which have been hiring since the beginning of the year, added 50,000 jobs in November. Most of those increases came from the temporary help and health care sectors. Manufacturing companies, which had showed some strength earlier in the year, lost 13,000 jobs. Temporary workers accounted for 40,000 of the net increase in private sector jobs. Staffing firms said that companies were continuing to use contract workers to fill gaps.
Employers are “still in the position of saying ‘hey, we need help, but only when we absolutely have to do we commit to permanent hiring,’ ” said Tig Gilliam, chief executive of Adecco North America, a temporary staffing company. “That uncertainty takes time to overcome.”
The anemic growth 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 mayors 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 jobs data.
“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.”
The lack of strong hiring has puzzled some because companies are enjoying strong profits and building large cash reserves. But economists said that employers are still holding back on adding new workers.
“What may be behind that is that a lot of this profit increase has come about from cost cutting,” said Kevin Logan, chief United States economist at HSBC Global Banking and Markets. “And I think a lot of businesses are saying they don’t have the pricing power they’d like, and they’re cautious about growth in final demand, and that may be reflected back to decisions about investment and job creation.”
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, and at November’s pace, the unemployment rate will continue to rise.
There was little good news on wages or the expansion of the workweek, with the average workweek holding steady at 34.3 hours. Average hourly earnings increased by just 1 cent to $22.75. Usually, growth in the number of hours worked and wages earned presage more hiring as companies max out existing workers.
The median length of time that the unemployed had been out of work rose to 21.6 weeks, the third month in a row that the duration has increased.
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.