More than half the new jobs November were added by retailers, restaurants and bars.
Last month the economy took another step in the right direction. The jobless rate fell to the lowest since March 2009.
The government’s latest job report Friday showed the unemployment rate fell to 8.6 percent. It was the first time it has been below 9.0 percent since May 2009.
The November jobs data follows a series of recent economic reports data showing that the economy is gradually getting back on its feet.
“There is some built-in resilience in the American economy,” said Austan Goolsbee, a University of Chicago professor and former White House chief economist. “We keep taking punches, but like the bunny, we’re coming back.”
U.S. employers added 120,000 new jobs in November, roughly what forecasters had expected. Job growth accelerated from October, and the government bumped up its job counts for September and October by a total of 72,000.
Private employers created 140,000 more jobs than they cut last month, while governments continued to shed workers. 20,000 overall, mostly at the local and state level. Faced with pressure to cut spending, government employers have eliminated roughly half-million jobs in the past year.
The average number of hours worked remained flat in November, while wages fell by 0.1 percent.
More than half the new jobs November were added by retailers, restaurants and bars. Retailers added 50,000 jobs, the sector’s biggest gain since April. Restaurants and bars hired 33,000 new workers. The health care industry added 17,000.
“The quality of jobs is not as great as you would like to see,” said Mark Vitner, a senior economist at Wells Fargo Securities. “A lot of the jobs were probably part-time positions and that is one of the reasons average hourly earnings fell.”
The surprise drop in the jobless rate was due in large part to the statistical impact of a sharp contraction in the government’s count of the size of the overall workforce. To be counted in the labor force, you have to be actively looking for a job during the week a separate household survey is conducted.
The labor force shrank by 315,000 people last month. That had the effect of lowering the ratio of the number of jobless workers when compared to the overall size of the workforce.
People leave the labor force, as defined by the government survey, when they retire, go back to school or get discouraged and stop looking for a job.
Some of those discouraged workers have recently exhausted their unemployment benefits. As of November, some 5.7 million workers were unemployed for 27 weeks or more, more than five times pre-recession levels.
Though the pace of job creation is picking up, it’s still too sluggish to continue to drive the jobless rate even lower, boost consumer confidence and prompt businesses to pick up the pace of hiring.
“People don’t feel good about the economy unless they feel good about the job market,” said Stanford University economist Ed Lazear. “So we need to get that back on track. But at least it’s moving in the right direction.”
The pace of hiring by new small businesses is also picking up. But while the rate of new business formations is accelerating, it still lags the levels seen before the recession. Some economists believe that’s because the collapse of the housing market has eliminated a major source of funding that drove start-ups during the housing boom.
“People took out a home equity lines of credit to start a new business, or they used their credit cards,” said Diane Swonk, chief economist at Mesirow Finanical. “They don’t have those options now. People never really relied on banks for small business loans.”
Despite the recent pickup in the economic recovery, most forecasters, including the Federal Reserve, see the pace of growth slowing again next year. Those forecasts are clouded by uncertainty about a variety of government policies that remain stalled by political division in Washington. Those include two current programs, a payroll tax cut and extended jobless benefits, that are set to expire at the end of the month. Failure to renew them could knock as much as a full percentage point from next year’s gross domestic product.
Much also depends on whether European leaders can resolve a widening financial crisis that has already tipped the euro zone into a recession. Despite two years of talks and a series of proposed solutions, nervous investors have pushed up government borrowing costs and European banks are tightening credit. So far, Europe’s central bank has been unwilling or unable to contain the crisis.
“The U.S. seems to have its act together,” said Eric Lascelles, RBC Global Asset Management chief economist. “We just have to cross our fingers now that Europe doesn’t go horribly wrong, because of course that could very quickly snuff out the kind of recovery we’re witnessing now.”
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