U.S. employment increased far less than expected in November, likely as millions of unemployed Americans remained home despite companies boosting wages, generous jobless benefits expiring and schools fully reopening.
Nonfarm payrolls increased by 210,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Economists polled by Reuters had forecast payrolls advancing by 550,000 jobs. Estimates ranged from as low as 306,000 to as high as 800,000 jobs.
November was the second full month of hiring following the expiration of federal government-funded unemployment benefits in early September. Data for October was revised up to show employment rising by 546,000 jobs instead of 531,000 as previously reported.
The unemployment rate dropped to 4.2%, the lowest since February 2020, from 4.6% in October. Wages increased further. The report came days after Federal Reserve Chair Jerome Powell told lawmakers that the U.S. central bank should consider speeding up the winding down of its massive bond purchases at the Dec. 14-15 policy meeting.
The modest employment gains could temper expectations that the economy was poised for stronger growth this quarter after hitting a speed bump in the third quarter. Consumer spending and manufacturing activity have been strong. But the Omicron variant of COVID-19 poses a risk to the brightening picture.
While little is known about Omicron some slowdown in hiring and demand for services is likely, based on the experience with Delta, which was responsible for the slowest economic growth pace in more than a year last quarter. There were 10.4 million job openings at the end of September. Millions of Americans who lost their jobs during the pandemic recession remain outside the labor force.
Economists say strong stock market and house prices have increased wealth for many Americans, encouraging early retirements. Households have also accumulated massive savings and there has been a surge in self-employment.
© 2022 Thomson/Reuters. All rights reserved.