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So why did November's employment report come in so far below expectations?
Economists had forecast that the economy would add more than half a million jobs in November. On Friday, the Department of Labor reported that the actual figure was just 210,000 new positions.
One thing to keep in mind when looking at the headline jobs number is that it is a seasonally adjusted figure. The Department of Labor adjusts the monthly jobs figures to smooth out seasonal changes in hiring to make it easier to compare how the labor market is doing throughout the year.
The Labor Department also releases the unadjusted figures each month. These show that the economy added 778,000 jobs in November, which means the adjustment subtracted 568,000 jobs. To put it another way, the adjustment assumes that the economy would add around 570,000 jobs even if the labor market did not strengthen at all. So only jobs added on top of that figure count as seasonally adjusted job growth.
A big part of that adjustment is in the retail sector, which tends to go on a hiring spree in November as stores staff up for holiday sales. The Labor Department reported that retail employment contracted by 20,000 jobs in November. Before the adjustment, however, the economy added 331,000 jobs. In other words, the adjustment's baseline is an additional 350,000 retail jobs, and November's hiring fell short of that.
This does not necessarily mean that November's jobs numbers were stronger than they appear. Falling short of the seasonal adjustment baseline means that retail employers hired fewer workers than history indicates would have been normal. And the forecasts from economists are for the seasonally adjusted numbers, and there's no doubt November fell short.
There is another factor to consider—one that suggests that retail hiring might actually be stronger than it appears to be. We entered this fall with a very well-publicized shipping and supply chain crisis and a labor shortage. Merchants were encouraged to stock up on goods, consumers were told to do their holiday shopping early, and stores began hiring for holiday shopping early.
Take a look at the unadjusted October retail jobs numbers. Employment in retail expanded 1.4 percent in October. That's slightly below the 2020 figure, when retailers grew payroll by 1.6 percent as the economy reopened. But it is nearly a half a percentage point higher than the average in the five years leading up to the pandemic, when retail employment expanded by 0.9 percent on average.
If we combine October and November hiring, we see that employment in retail expanded by 3.61 percent over the two months. That's below the very strong four percent of last year's reopening bonanza but ahead of the five-year pre-pandemic average of 3.47 percent.
Let's look at the raw numbers. Retailers added 552,100 employees to payrolls in October and November combined. That too is above the prepandemic average of 546,100.
So what seems to have happened is that the supply chain concerns pushed hiring forward on the calendar, leaving fewer spots to fill in November. That's a very similar story to what happened in retail sales, where stronger than expected sales in October appear to have led to weaker than expected sales following Thanksgiving.
– Alex Marlow & John Carney
Breitbart News Network
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