The economy added only 39,000 jobs in November, far worse than the 150,000 increase forecast by Wall Street analysts, and not fast enough to keep up with population growth.
Feeble job creation suggests the economy is not gathering steam and highlights the jobless nature of the recovery so far. Some analysts questioned the weakness of the numbers, however, and suggested that they may be revised.
The weak report undermines an Obama administration that has staked its credibility on
success in creating jobs.
“An unemployment rate of 9.8 per cent is unacceptably high and we need to achieve robust employment growth in order to recover from the deep job losses that began over two years ago,” said Austan Goolsbee, chairman of the President’s Council of Economic Advisers.
Private sector employment rose by 50,000, held back by a drop of 28,000 in the retail sector, while budget pressures on states and cities led to an 11,000 fall in government jobs. Average hourly earnings and the average work week – both important indicators of future hiring – were flat compared with October. Politicians on both sides of the aisle demanded action to combat rising unemployment but called for wildly different policy responses.
“The fact that the unemployment rate has risen means that we have to pass unemployment insurance extensions,” Carolyn Maloney, Democratic chair of the joint economic committee in Congress, told the Financial Times.
Two million Americans will lose their benefits at the end of the month unless Congress extends them.
John Boehner, Republican leader in the House of Representatives, said: “Any sign of job growth in this struggling economy is encouraging but clearly no match for the uncertainty families and small businesses are facing, which is why we must cut spending and stop all the looming tax hikes.”
Economists said weak job growth supported the Federal Reserve’s decision to engage in a new $600bn round of asset purchases designed to lower long-term interest rates. The yield on 10-year notes tumbled to 2.90 per cent from 3.05 per cent in a matter of minutes as the jobs data were digested, but by midday in New York the yield had backed up to 2.97 per cent, 3 basis points lower on the day.