The labor market expanded last month, but the net gain in private nonfarm payrolls was disappointing, even by the deflated standards of late.
The private sector added a net 50,000 jobs in November, the Labor Department reports. That’s far below what many economists were predicting. November’s meager gain is also a sharp slowdown from the 160,000 rise in October. No wonder, then, that the unemployment inched higher last month to 9.8% vs. October’s 9.6%.
Today’s report is a stark reminder that job growth by itself isn’t necessarily a cure for the macro ills weighing on the U.S. economy. The real solution is robust job growth, and that was nowhere in sight last month.
The slight progress in private payrolls overall masks the deterioration last month in manufacturing. Save for a small uptick in in mining and logging employment, goods-producing industries generally shed workers in November. The services sector, as usual, came to the rescue, but even here there was only modest improvement of 65,000 positions.
If today’s jobs report muddies the outlook for the economy, it sharpens the clarity for the debate over extending the Bush tax cuts, which are due to expire at the end of this month. As USA Today reports,
Ten minutes after the latest report from the U.S. Labor Department, Republican Eric Cantor of Virginia — the incoming House Majority Leader — said the rising jobless rate shows the need for new GOP leadership.
“The new Republican majority will be committed to changing the culture in Washington by cutting spending and stopping government overreach so our businesses can do what they do best – innovate, compete, and lead,” Cantor said in a statement.
Republicans also used the bad economic news to push their case that George W. Bush-era tax cuts should be extended for all Americans, including wealthy ones who can create jobs.
“The last thing our economy needs right now is a job-killing tax hike,” said incoming House Speaker John Boehner, R-Ohio.
Today’s news on the labor front also brings additional perspective on the Federal Reserve’s efforts to stimulate the economy. David Semmens, a U.S. economist at Standard Chartered Bank, explains: “The labor market is not turning around, and that’s key to the overall recovery. Anyone who feels that the Fed perhaps acted too prematurely is definitely going to have to eat their words.”