Streams

Unemployment Rate Climbs to 9.8 Percent as Economy Adds 39,000 Jobs

Friday, December 03, 2010

Hopes that the businesses have hired more people as the economy recovers were scuttled Friday after the government reported anemic job growth in November.

The government reported this morning that the nation’s payrolls increased by on by 39,000 jobs.  Economists had been expecting an increase closer to 150,000.

It was a blow to expectations of strong job creation based on other indicators such as increases in consumer confidence and spending as well as record corporate profits.

“I am very surprised,” said Mark Zandi, chief economist of Moody’s Analytics during an interview on CNBC.  “I am very disappointed.”

In a separate survey, the unemployment rate increased to 9.8 percent.  More than 15 million Americans are now unemployment.  Today’s report will be especially disappointing news for the nearly 42 percent of those out of work for more than six months.

"Job growth in November was extremely disappointing," said Joel Naroff, president of Naroff Economic Advisors.

[How is the job market looking to you?  Rut or recovery?  Tell us your story.]

This week extended unemployment benefits paid for by the federal government expired.  An estimated two million people will lose benefits by the end of the month unless Congress approves additional spending. 

The private sector only created 50,000 jobs in November compared to 172,000 in the month prior.  In addition, most of  November’s private sector jobs consisted of 40,000 temporary workers.

"The recovery is still lackluster and in need of support," wrote Diane Swonk, chief economist at Mesirow Financial.  "I fully expect today's data to push Congress to extend unemployment benefits, along with all of the Bush tax cuts, in the coming weeks."

Public sector employment continues to shrink especially at the local government level. And even as recent reports conclude that state and local governments are collecting more tax revenues, future cuts to payrolls are still expected.  The Rockefeller Institute at the State University of New York said revenues were up by rose by more than 2.5 percent this summer compared to last, but still lag levels from two years ago significantly.

"With the end of federal fiscal relief to the states, states and localities will have to finance an increasing share of outlays out of their own resources," said Gary Burtless, a senior fellow at the Brookings Institution.  "Even though state tax collections have improved in recent months, many states and localities face a harsh budget outlook.  It is hard to believe a large number of them will be adding to their payrolls."

Economists say that 150,000 jobs need to be created each month to keep unemployment from rising.  But with the unemployment above 9 percent for all of 2010, economists forecast job creation must consistently exceed at 200,000 jobs to bring down unemployment.

Not only did employers hire fewer people than expected, they did not significantly increase worker pay and hours worked in November remained flat.  That indicates that businesses do not need current employees to work more and could hire additional staff to offset the increased demand for products.

As in previous months, the health care sector and temporary workers accounted for most of the job growth.  Surprisingly during the holiday shopping season, retail jobs actually declined by 28,000.  The manufacturing sector cut 13,000 positions.

The next jobs report is scheduled to be released on January 7.

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Comments [1]

Scott

Here is a great article with tips on how to find a job:

http://helpsavemydollars.com/2010/05/find-job/

Dec. 03 2010 06:27 PM

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