Today’s report by the Labor Department that payroll employment declined only 11,000 last month, while the unemployment edged down to 10 percent from 10.2 percent in October, is a sign that the labor market is gradually stabilizing. The modest overall employment decline in November was mainly due to a rather large increase in temporary employment. At the same time, there was a noticeable increase in weekly hours worked to 33.2 in November from an historic low of 33 in October. Both of these measures have traditionally been precursors to overall employment growth.
It is important to note that one month does not make a trend, and this initial estimate of the employment situation in November will be revised. Manufacturing continues to be hit hard, losing 41,000 more jobs and widespread employment losses continued across most sectors of the economy in November — including construction, retail, finance, and leisure and hospitality.
Employers remain cautious and still lack the confidence to make permanent hires as several risk factors loom over their heads with policy discussions in Washington that could send the economy in the wrong direction.
(David Huether is chief economist of the National Association of Manufacturers)