November US unemployment falls to 7%, lowest in 5 years
The November US unemployment rate declined to 7% from 7.3% in October, with (nonfarm) payroll jobs increasing by 203,000, according to the US Bureau of Labor Statistics.
The main drivers of the US November unemployment decline were in warehousing, transportation, manufacturing and healthcare.
The number of people reporting being temporarily unemployed (laid off) fell by 377,000 in November.
Most of this figure was due to federal employees who were furloughed in the October partial government shutdown.
Unemployment data according to major worker groups:
- Adult men – 6.7%
- Adult women – 6.2%
- Teenagers – 20.8%
- Caucasians – 6.2%
- African-Americans – 12.5%
- Hispanics – 8.7%
- Asians – 5.3%
There were 300,000 fewer people unemployed for less than 5 weeks in November compared to October, partially reflecting the number of federal workers who had been laid off during the government shutdown and who were back in work in November.
Economists say that the only figure that really matters is the 7% unemployment rate, because much of the rest was distorted by federal workers who were counted as jobless in October due to the government shutdown and appeared as job gains in the November figures.
November US unemployment – long-term unemployed
There were 4.1 million long-term unemployed people – jobless for at least 27 weeks – in November, about the same number as in October. Over one third (37.2%) of US unemployed people have been out of work for 27 weeks or more.
Over the last 12 months the number of long-term unemployed people has fallen by 718,000.
Does this mean end of quantitative easing?
Former chairman of the US Federal Reserve, Ben Bernanke, had said that when the unemployment rate fell below 7%, the Fed would look to end its stimulus program of buying $85 billions’ worth of bonds each month, known as quantitative easing.
Bernanke said in a press conference in June this year:
“When asset purchases ultimately come to an end, the unemployment rate would likely be in the vicinity of 7 percent, with solid economic growth supporting further job gains (before scaling back on the stimulus program).”
Media reaction to November US unemployment figures
The BBC quotes Chris Williamson, chief economist at research firm Markit, who said:
“The decline pushes the jobless rate down to its lowest since November 2008 and closer towards the Fed’s threshold of 6.5%, which it wants to see breached before it considers tightening policy via higher interest rates.”
Reuters quotes Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors in Wilmington, Delaware, who said:
“The economy is still not generating the levels of inflation the Fed would like to see, so that may give them a little space to maneuver. I don’t think (the payrolls data) backs the Fed into the corner that they have to taper in December.”
The Huffington Post quotes Mike Evangalist, an analyst for the National Employment Law Project, who said regarding the long-term unemployed:
“Outside of unemployment insurance, I can’t think of a single policy the federal government’s really enacted to help these people.”
Statement by Labor Secretary Thomas E. Perez
Thomas E. Perez, US Secretary of Labor, made the following statement regarding the November US unemployment rate:
“The American economy continues its broad and steady job growth heading into the New Year, adding 203,000 jobs in November. The unemployment rate dropped to 7.0 percent, and American manufacturing remained strong with the addition of 27,000 new jobs. The November employment report continues the 45-month trend of private-sector job growth, with 8.1 million new jobs created over that time. In the last 12 months alone, American businesses have added 2.3 million new private-sector jobs. This puts the American economy in a strong position heading into the December holiday season.”
“But despite broad-based job growth, the November report reminds us that far too many American families are still struggling to get by. The rate of unemployment for the long-term unemployed remains higher than at any point prior to the Great Recession. As the president underscored earlier this week, growing inequality and a lack of upward mobility has jeopardized middle-class America’s basic bargain – that if you work hard, you have a chance to get ahead. This point was underscored by a report released this week highlighting that if Congress fails to act, 1.3 million workers and their families will lose Emergency Unemployment Compensation benefits immediately.”
“The progress made since the depths of the recession in 2010 is a testament to the resilience of the American economy and the American people. But we can and should be doing more. We must invest in infrastructure, pass comprehensive immigration reform, extend the Emergency Unemployment Compensation program and raise the minimum wage. Current job growth is happening in spite of Congress, not because of it. It’s time Congress does its part to accelerate job growth and give more Americans the chance to climb ladders of opportunity.”