November Jobs Report: Mixed Signals on Job Market Health

The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor Senior Economist Daniel Zhao.

Today's jobs report presents a mixed picture of the labor market recovery with the establishment and payroll survey diverging in November. Employers added 210,000 jobs, down significantly from 546,000 jobs added in October. The household survey, however, showed 1,136,000 more workers, reducing the unemployment rate to 4.2 percent from 4.6 percent. The divergence complicates the picture of the labor market as storm clouds gather from rebounding Delta variant cases and new variant threats.

Payroll Growth Down to 210,000 in November

Jobs growth slowed significantly in November, falling to 210,000 from 546,000 jobs added in October. Jobs growth in November dropped to its slowest rate all year. The slowdown in leisure & hospitality job gains in November, adding 23,000 jobs down from 170,000 in October, was a large contributor to the overall slowdown. Holiday hiring was also mixed in retail (-20,400 jobs) and transportation & warehousing (+49,700) as strong consumer spending was not enough to drive consistent jobs growth.

Unemployment Drops to 4.2 Percent

The unemployment rate fell significantly to 4.2 percent in November, a large improvement from 4.6 percent in October, and matched by a solid improvement in the labor force participation to 61.8 percent from 61.6 percent. Notably, the unemployment rate dropped significantly for Black or African American workers, falling to 6.7 percent from 7.9 percent, the largest one-month drop in a year. The drop in unemployment was in part driven by temporary layoffs falling to 801,000 from 1.056 million as employers pull workers back from furlough with the Delta wave receding.

Mystery in Surveys’ Divergence 

The divergence between the establishment and household surveys is unusual, but is an important reminder of how difficult it is to measure the labor market during a pandemic. The establishment survey generally excludes the self-employed and single-counts multiple job holders, but multiple job holders increased and self-employment dropped, exacerbating the difference between the two surveys. However, the BLS's adjusted household survey series (adjusted to match the establishment survey definition) shows the gap in the two surveys closing after a gap opened up in May 2021, suggesting some seasonal factors may be at play.

Recovery in the Coming Months

Concerns about the new Omicron variant are rising, though rebounding cases of Delta already pose a threat to the recovery. As the Delta slowdown lingers, a worsening pandemic risks crimping demand for workers while also keeping pandemic-wary workers on the sidelines. And COVID-sensitive industries—leisure & hospitality, education and health care— account for 69 percent of the jobs shortfall relative to pre-pandemic levels. A resurgent pandemic threatens to block a full jobs recovery.

Today's report presents a conundrum to policymakers who were hoping for a report providing confidence in labor market health. Ultimately, there's something in the report to argue for either faster or slower tightening, leaving the debate unsettled.

More Insights

Payroll growth slowed to 210,000 jobs added in November, the slowest rate of jobs growth all year.

But on the flip side, employment by over a million and the unemployment rate fell to 4.2 percent in November from 4.6 percent.

The slowdown in service sector jobs growth drove the overall slowdown in jobs growth. Leisure and hospitality added only 23,000 jobs, down from 170,000 in October. Retail lost 20,400 jobs after adding 37,800 in October.

The impact of the lingering Delta wave can't be ignored. COVID-sensitive industries like leisure & hospitality, education and health care account for 69 percent of the remaining jobs shortfall compared to pre-pandemic levels. The pandemic remains the largest threat to a full jobs recovery.

The drop in unemployment was in part driven by temporary layoffs falling to 801,000, dropping below 1 million for the first time in the crisis as employers brought workers off furlough. Permanent layoffs also dropped below 2 million for the first time since March 2020.

The Black unemployment rate dropped by a notable 1.2 percentage points, falling to 6.7 percent from 7.9 percent. There was a modest decline in Black labor force participation, but employment still grew for Black workers by 169,000.

Year-over-year wage growth dropped slightly to 4.8 percent, largely flat. Strong demand for workers has kept wage growth high as employers raise pay to attract workers.

Wage growth for production and nonsupervisory workers in leisure & hospitality has slowed significantly from hot summer levels.

Holiday hiring in retail was weak in November—the weakest since 2010. Some hiring may have been pulled forward into October, but October and November hiring combined is still the weakest since 2016. The shift to e-commerce and online shopping may be shifting jobs from traditional brick-and-mortar retail to transportation & warehousing.

Private & public education lost 20,000 jobs on a seasonally-adjusted basis. That's likely a result of the seasonal adjustment difficulties during the pandemic. Education saw 21,600 jobs lost last November. Over the course of the school year, these seasonal adjustments should net out.

The share of workers teleworking due to the pandemic ticked down to 11.3 percent in November. Now that some companies are pushing back return-to-office plans due to Omicron, it's possible we'll see a rebound in workers teleworking in December.