Economy adds 210K jobs in November, well short of expectations

The U.S. economy added 210,000 jobs in November, far below economists’ expectations, while the unemployment rate plunged 0.4 percentage points to 4.2 percent, according to data released Friday by the Labor Department.

The U.S. gained just half of the roughly 500,000 jobs economists expected to see added to payrolls as consumer spending rallied in the face of high inflation. The jobless rate, however, fell far lower than the 4.5 percent projected by analysts — even as labor market participation rose slightly.  

November’s job report showed a confounding divergence between how many jobs employers added to their payrolls based on a survey of businesses and the overall strength of the labor market as reported by Americans. While the top-line jobs number fell far short of expectations, some analysts suggested it could be revised substantially next month given the broader signs of labor market strength.

“As has been the case several times this year, there are reasons to believe that this understates the improvement. Almost 6 million more people are employed compared to last November,” wrote Mike Fratantoni, chief economist for the Mortgage Bankers Association, in an analysis

Fratantoni said seasonal adjustments based on pre-pandemic hiring patterns may have skewed the overall jobs gains lower, and pointed to several previous jobs reports that were revised substantially higher. The Labor Department revised employment growth between June and September higher by 626,000 jobs, reflecting the challenges tracking a pandemic-roiled economy.

“The large decline in the unemployment rate to 4.2%, the increase in the labor force participation rate, and the almost 5% year-over-year gain in average hourly earnings all highlight the tightening job market,” Fratantoni wrote. “Coupled with the still elevated number of job openings, and this suggests that the economy is getting closer to full employment.”

The unemployment rates for Black and Hispanic workers also improved substantially, and women’s labor force participation rose 0.2 percentage points to come even with its pre-delta surge level of 56.2 percent.

While many gauges of labor market strength improved in November, the disappointing top-line number is likely to boost political pressure on President Biden and Democrats at a critical time for their agenda. Democrats are seeking to pass Biden’s $1.75 trillion social services and climate plan and avert a fiscal cliff amid unanimous Republican opposition.

As Biden vies to unclog supply lines, the president and his party have sought to tamp down on concern about inflation by highlighting rapid recovery from the onset of the pandemic. The U.S. has experienced the strongest recovery of any nation hit hard by COVID-19, while many others have also struggled with high inflation amid the reopening of the global economy.

Updated at 9:20 a.m.