Tags: Unemployment | Rises | US | Jobs

Unemployment Rises to 9.8 Percent as US Adds Only 39,000 Jobs

Friday, 03 Dec 2010 08:52 AM

 

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Employers added fewer jobs than forecast in November and the unemployment rate unexpectedly increased, vindicating the Federal Reserve’s decision to pump more money into the economy to spur growth.

Payrolls increased 39,000, less than the most pessimistic projection of economists surveyed by Bloomberg News, after a revised 172,000 increase the prior month, Labor Department figures showed today in Washington. The jobless rate rose to 9.8 percent, the highest since April, while hours worked and earnings stagnated.

Stocks declined and Treasury securities jumped as the report showed payrolls aren’t growing fast enough to reduce the jobless rate, one reason why Fed policy makers announced a new round of monetary stimulus. More jobs are needed to sustain the holiday-season gains in consumer spending, the biggest part of the economy, into the new year.

“There is some uncertainty about the outlook,” John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston, said before the report. Still, “as the recovery gains more traction and business managers become confident about hiring, we think that will ultimately lead to greater job retention.”

Futures on the Standard & Poor’s 500 Index expiring this month dropped 0.6 percent to 1,216 at 8:36 a.m. in New York. The benchmark 10-year Treasury note rose, pushing down the yield to 2.92 percent from 2.99 percent late yesterday.

Private Payrolls

Private payrolls that exclude government agencies also gained less than forecast, rising by 50,000 in November. Economists projected a 160,000 gain, the survey showed.

The unemployment rate was forecast to hold at 9.6 percent, according to the median prediction of 83 economists surveyed by Bloomberg. Estimates ranged from 9.4 percent to 9.7 percent.

Manufacturers cut jobs for a fourth straight month, payrolls dropped at construction companies and government employment declined.

Overall payrolls were forecast to climb by 150,000, according to the survey median, with estimates ranging from 75,000 to 200,000. The October figure was revised up from an initially reported gain of 151,000.

Manufacturing payrolls dropped by 13,000 in November, the most in three months. Economists had projected an increase of 5,000.

Construction Payrolls

Employment at service-providers increased 54,000. The number of temporary workers rose 39,500. Construction companies subtracted 5,000 workers and retailers let go 28,100 workers.

Average hourly earnings were $22.75 in November from $22.74 in the prior month, today’s report showed.

Government payrolls decreased by 11,000. State and local governments reduced employment by 13,000, while the federal government added 2,000 jobs.

New York City, facing a $3.3 billion deficit in next year’s budget, will cut its workforce by more than 10,000 over the next year-and-a-half, Mayor Michael Bloomberg’s budget office said Nov. 18. More than 6,200 workers will be fired, and the remainder of the cuts will be made through attrition, his office said.

The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

The average work week for all workers held at 34.3 hours.

The so-called underemployment rate — which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking — held at 17 percent.

Underemployment Rate

The report also showed an increase in the number of long- term unemployed Americans. The number of people unemployed for 27 weeks or more increased as a percentage of all jobless, to 41.9 percent, the highest since August.

One reason why hiring isn’t gaining speed is the economy’s inability to match the recovery’s earlier pace of growth. Gross domestic product expanded at a 2.5 percent annual rate in the third quarter, half the pace in the last three months of 2009.

It’ll also take time to make up for the loss of more than 8 million jobs, a fallout of the worst recession since the 1930s.

Fed policy makers last month began buying Treasury securities as part of a plan to pump as much as $600 billion more into the financial system in a bid to keep interest rates low and spur growth.

Chairman Ben S. Bernanke has been among those saying the recovery has been too slow, keeping unemployment too high and leading to a deceleration in inflation that raises the risk of deflation, or sustained and damaging price decreases.

In an effort to reach out to some of the nation’s largest employers, President Barack Obama met with Wal-Mart Stores Inc. Chief Executive Officer Mike Duke at the White House on Nov. 29. The meeting is one of a series of sessions aimed at soliciting the views of companies, with the goal of spurring the recovery and adding jobs.

© Copyright 2014 Bloomberg News. All rights reserved.

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