Friday, December 2, 2011

Unemployment Rate Dropped to 8.6 on 120,000 New Jobs

The US economy added 120,000 jobs in November, dropping the unemployment rate to 8.6% according to a Bureau of Labor Statistics report released this morning. November’s report also included significant revisions to previous months' data. September’s job growth was revised up by 52,000 to 210,000 new jobs and October’s job growth was revised up by 20,000 to 100,000 new jobs.

The private sector created 140,000 jobs in November and has now added jobs for 21 straight months. The gains in employment continue to come primarily from the service sector, which created 146,000 jobs in November. The goods producing sector shed 6,000 jobs for its third loss in four months.

The public sector continues to be a drag on growth shedding 20,000 jobs. The public sector has added jobs in only one of the past 12 months.

The unemployment rate has dropped below the 9% level to 8.6%, levels not seen since March 2009. From April to September the unemployment rate held in a narrow range between 9.0% and 9.2%. Although this drop in the unemployment rate is positive it occurred largely due to a contraction in the labor force.

The household survey indicated that the unemployment rate dropped on the creation of 278,000 new jobs and a contraction of the labor force by 315,000. This led the labor force participation rate to fall to 64.0% from 64.2%. The breadth of job growth (the diffusion index) narrowed in November to 54.7% from 59.6% indicating that job growth is due mostly to a few industries.

ABA’s Chief Economist James Chessen commented, “Although it is encouraging to see the unemployment rate fall below 9% there are details of this report that are cause for some concern. The level of discouraged workers is very high and growing, so maintaining the 8.6% unemployment rate is unlikely in the near term. Job growth is still not strong enough to make consistent and sustainable progress in reducing unemployment. We’re still running at half of what is needed to eat away at unemployment in a meaningful way."

Read the report.

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