Unemployment dips to 7.7 as number of people working or looking for work drops by 350,000
WASHINGTON — It takes more than a superstorm to derail the U.S. job market.
Employers added 146,000 jobs in November and the unemployment rate dipped to 7.7 percent, a four-year low, the government said Friday.
Though modest, the job growth was encouraging because it defied disruptions from Superstorm Sandy and employers' concerns about impending tax increases from the year-end "fiscal cliff."
Analysts said the job market's underlying strength suggests that if the White House and Congress can reach a budget deal to avoid the cliff, hiring and economic growth could accelerate next year.
A budget agreement would coincide with gains in key sectors of the economy.
Builders are breaking ground on more homes, which should increase construction hiring. U.S. automakers just enjoyed their best sales month in nearly five years. And a resolution of the fiscal cliff could lead businesses to buy more industrial machinery and other heavy equipment. That would generate more manufacturing jobs.
"The ground is being prepared for faster growth," said Nigel Gault, an economist at IHS Global Insight.
House GOP leader John Boehner said Friday that the two sides had made little progress in talks seeking a deal to steer clear of the cliff.
The White House used Friday's mixed jobs report as an argument to push President Barack Obama's proposed tax-rate increases for top earners, public works spending and refinancing help for struggling homeowners.
Superstorm Sandy, contrary to expectations, dampened job growth only minimally in November, the government said. Job gains were roughly the same as this year's 150,000 monthly average, and the unemployment rate fell two-tenths of a percentage point to its lowest level since December 2008.
That suggests that fears about the cliff haven't led employers to cut staff, though they aren't hiring aggressively, either. The economy must produce roughly twice November's job gain to quickly lower the unemployment rate.
Friday's report included some discouraging signs. Employers added 49,000 fewer jobs in October and September combined than the government had initially estimated. Monthly job totals come from a survey of 140,000 companies and government agencies, which together employ about 1 in 3 nonfarm workers in the United States.
And economists noted that the unemployment rate would have risen if the number of people working or looking for work hadn't dropped by 350,000.
The unemployment rate is derived from a separate survey of about 60,000 households that are asked whether the adults have jobs and whether those who don't are looking for one. Those without a job who are seeking one are counted as unemployed. Those who aren't looking aren't counted as unemployed.
All told, 12 million people were unemployed in November, about 230,000 fewer than the previous month. That's still many more than the 7.6 million who were out of work when the recession officially began in December 2007.
Investors appeared pleased with the report. The Dow Jones industrial average closed up 81 points.
For now, worries about the cliff have led some companies to cut back on purchases of heavy equipment. Consumers are also signaling concern. A survey of consumer sentiment fell sharply in December, economists noted, partly over worries that taxes could rise next year.
But a resolution of the cliff could accelerate job growth in the construction and manufacturing industries. Those sectors, on average, pay more than the retail and restaurant jobs that have helped drive hiring in recent months and tend to contribute more to economic growth.
Construction workers earned an average of $26 an hour in November. Factory workers averaged $24 an hour. Both far exceed the hourly average of $16.40 for retail employees and about $13.40 for hotel, restaurant and other hospitality workers.
"The good news is not that the labor market is improving rapidly — it isn't — but that employment growth is holding up despite all the fears over the fiscal cliff," Gault said.
He estimates that a budget deal would boost the economy's average monthly job gains to about 200,000 next year.
One company that could step up hiring next year is Ahaus Tool & Engineering in Richmond, Ind., which makes assembly machines for the automotive and power-generation industries.
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