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Economic Watch: Job Gains Soar, Factory Activity Slows

December 5, 2014

By Evan Lockridge

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The number of people who found jobs in November increased dramatically from the month before but the unemployment rate was unchanged, according to U.S. Labor Department numbers released Friday morning.

There was a net gain of 321,000 jobs in the country during the month, far higher than 214,000 that were added in October and the best performance in nearly three years. The department also upwardly revised job numbers from September and October showing 44,000 more were added that previously reported.

The report is also in sharp contrast to one issued two days earlier by payroll processor ADP showing only a modest job gain for November.

Trucking contributed 3,000 of the job gains in November while it added 300 more in October than previously reported by the department. The wider transportation and warehousing sector increased by 16,700 jobs in November.

So far this year monthly overall job gains have averaged 241,000, putting this year to be on track to be the best for hiring since 1999. November also marks the 10th consecutive month of at least 200,000 jobs being added, the first time that has happened since 1995.

Despite the better November performance the nation’s unemployment rate remained at 5.8% as the number of adults either actively working or looking for work was flat compared to October. The November unemployment rate compares to one of 7% a year ago and nearly 10% five years ago.

“While we have made impressive improvements relatively speaking, 200,000 is the minimum needed to cover population change and first time entrants into the labor market. This morning’s report is the first monthly report in years, where the market can applaud outright strength, the type of strength needed to justify a change in monetary policy [by the Federal Reserve],” said Lindsey Piegza, chief economist at the investment firm Sterne Agee. “Of course, one month does not make a trend, and the threshold for removing accommodation will likely take several months of outright strength to convince policy makers that the U.S. labor market is on strong enough footing to withstand a higher rate environment”

Still, she said, with a robust headline number and the first significant monthly increase in wage growth in years, “the hawks at the Fed are no doubt chomping at the bit to get the ball rolling. While cautiously optimistic, the Doves, on the other hand, will no doubt reign in any sense of immediacy, instead calling for several consecutive months of repeating this morning’s apparent strength in the jobs market, a feat that will not come easily.”

A separate report issued by the U.S. Commerce Department is in sharp contrast to the jobs report, showing shipments and new orders for factory made goods both fell, but the figures are for October, rather than November.

Shipments declined for the second out of the past three months, dropping 0.8% from September, following a 0.1% gain. New orders fell for the third straight month, down 0.7% from September, when it fell a revised 0.5% from August.

On the upside, shipments and new orders for factory made durable goods during October, both posted gains. Shipments increased 0.1% from the month before, the same as an earlier advance report and is fourth gain in the last five months. New orders added 0.3% during the same time frame, its first positive number following two straight monthly declines, but was down from the advance report of a 0.4% increase for October.

The trend in declining factory orders may show it continuing into last month, once those numbers are published by the Commerce Department. A first look at the manufacturing sector for November a few days ago by the nation’s purchasing executives showed manufacturing was continuing to expand but at a slower rate.

 

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