Employment Growth is Slowing

Commentary on today’s U.S. Bureau of Labor Statistics Employment Situation Report

By Dana Peterson, Chief Economist of The Conference Board

The pace of labor market recovery continued to moderate in November as cases rose and the economy slowed. The unemployment rate continued to tick down, falling from 6.9% to 6.7%. Total nonfarm employment increased by 245,000, and by 338,000 excluding temporary census workers. In the private sector, a net 344,000 jobs were added, mainly in services.

The largest increases in services payrolls were among health care and social assistance, professional and business services, and transportation and warehousing. Indeed, transportation and warehousing surged in the month, reflecting the rising trend in online shopping, while retail trade jobs shrunk as brick and mortar stores continue to struggle. Among goods, manufacturing and construction continued to add workers, consistent with manufacturing PMIs signaling factory industry expansion and the continued strength in the residential housing market.

It is possible that the dip in unemployment reflected a notable decline in the rate of joblessness among women and persons with limited education, who had suffered the brunt of layoffs at the start of the pandemic. However, young people experienced a setback as the unemployment rate among teens inched up.

Jobless rates by racial group continued to fall, but rates remained elevated for Black and Hispanic persons. Also, concerns about a shrinking labor force remain as participation rates among both men and women declined in the month. Indeed, older workers are retiring sooner than expected, and many women are leaving the labor market amid pandemic stresses.

Given the rapid spread of the virus, the main question regarding the US economy is whether it will contract during the winter. While job growth slowed, it is still positive. However, as the virus continues to spread, consumers’ fear of getting infected may rise. Already, state and local governments’ pandemic-related policies are becoming more restrictive, thus hindering mobility and the economic benefits that result from it. That could lead to a decline in the number of workers in industries such as restaurants, travel, accommodation and out-of-home entertainment. In addition, some government stimulus measures are about to expire at the end of December.

Looking ahead, we continue to anticipate moderate gains in employment over the coming months and continued gradual decline in jobless rates.

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