US job growth beats expectations in November; jobless rate at 4.6%

[WASHINGTON] US job growth rebounded in November after non-farm payrolls declined in October because of government spending cuts, but the unemployment rate was at 4.6 per cent as the labour market weakened against the backdrop of economic uncertainty stemming from President Donald Trump’s aggressive trade policy.

The delayed employment report for November and a partial update for October published by the Labor Department’s Bureau of Labor Statistics (BLS) on Tuesday (Dec 16) did not include the unemployment rate and other metrics for October, after the 43-day shutdown of the government prevented the collection of data from households.

Non-farm payrolls increased by 64,000 jobs last month, the BLS said. The economy shed 105,000 jobs in October, reflecting the departure of more than 150,000 federal employees who took deferred buyouts as part of the Trump administration’s push to shrink the government’s footprint. Most of them dropped off government payrolls at the end of September.

Payrolls were not impacted by the furloughing of workers during the longest shutdown in history, as they were retroactively paid when the government reopened.

The unemployment rate was at 4.4 per cent in September. The BLS made changes to weights for labour force estimates because no data was collected in October.

Ahead of the employment report, the BLS said November labour force estimates “will have slightly higher variances than usual”, adding the weighting change “will not be needed for the December estimates, which will return to the usual composite weighting methodology”.

It also said twice as many new households would be participating in the household survey in November than in a typical month, while others would be returning after taking a break in the middle of their enrollment period. Some economists warned this could cause an upward bias in the unemployment rate in November.

Households’ perceptions of the labour market deteriorated in November.

Economists say employers have pulled back from hiring because of what some described as a shock from Trump’s sweeping import tariffs. The import duties have raised prices for many goods, resulting in consumers – mostly lower and middle-income households – being more selective in their purchases and ultimately cutting back on spending.

SEE ALSO

US Fed faces dual-mandate challenge amid a divided path forward

Federal Reserve officials last week cut the US central bank’s benchmark overnight interest rate by another 25 basis points to the 3.5 to 3.75 per cent range. However, they signalled borrowing costs were unlikely to fall further in the near term as they awaited clarity on the direction of the labour market and inflation.

Fed chair Jerome Powell told reporters the labour market “seems to have significant downside risks”, alluding to a preliminary benchmark revision estimate in September that suggested 911,000 fewer jobs were created in the 12 months through March than previously reported, the equivalent of 76,000 fewer jobs per month.

The BLS will publish the final payrolls benchmark revision in February, along with January’s employment report. REUTERS