November Jobs - Mixed Message

Payroll additions miss by a margin; Unemployment drops significantly?  U.S. job growth slowed to its lowest level in 2021, while participation ticked higher and unemployment marked a fresh post-pandemic best.  We can only assume that seasonal adjustments* played a role in the mixed message we find in today’s jobs report.  Looking ahead to the December Fed meeting, this will most certainly complicate messaging with respect to accelerated tapering given the payroll shortfall and looming uncertainties around the Omicron variant.  The markets are generally shrugging off the payroll miss this morning, perhaps reflecting the view that the Fed will be less likely to accelerate and/or based on the fact that we have seen significant upward revisions to the last several months of payroll additions – perhaps Novembers disappointing number will be revised higher as well.

210K payrolls added in November – Well below forecast; September and October figures revised higher.  The U.S. labor market added 210K payrolls in November, losing steam after adding 546K in October (revised from +531K originally reported) and 379K in September (revised from +312K).  Forecasts ranged from +375K to +800K with a median of +550K so today’s outcome missed all expectations.  Notable job gains occurred in professional and business services, transportation and warehousing, construction, manufacturing and leisure and hospitality.  So far, payroll additions have averaged 555K per month in 2021.  Employment has increased by 18.5M since April 2020, but remains 3.9M (2.6%) below pre-pandemic levels.

2% unemployment rate better than expected.  The U.S. unemployment rate improved 0.4% to 4.2% in November.  Forecasts ranged from 4.3% to 4.6% with a median of 4.5% so today’s outcome beat all expectations.  The labor force participation rate edged up to 61.8% from 61.6%, but remains 1.5% below pre-pandemic levels and largely attributable to retirements.