U.S. Payroll Growth Slows Broadly

• Job gains held back as coronavirus spreads.

• Earnings growth picks up.

• Jobless rate declines to eight-month low.

The rate of labor market improvement has slowed following an initial bounce-back from recession declines. Nonfarm payroll employment increased 245,000 during November (-6.0% y/y) after rising 610,000 in October, revised from 638,000, and 711,000 in September, revised from 672,000. August's gain of 1.493 million was unchanged. This was the weakest of seven consecutive months of job gains. A 490,000 employment increase had been expected in the Action Economics Forecast Survey. The estimates amongst 25 forecasters had ranged from 320,000 to 700,000.

Average hourly earnings increased 0.3% (4.4% y/y) last month following two months of 0.1% improvement. It was the largest increase in three months. No change in earnings had been expected.

The unemployment rate fell to 6.7% during November from October's 6.9%. A decline to 6.8% had been expected. Employment in the household survey fell 74,000 (-5.6% y/y) after increasing 2.243 million in October while the labor force declined 400,000 (-2.4% y/y) after rising 724,000 in October. The overall jobless rate, including those who were marginally attached or working part-time for economic reasons, slipped to 12.0% from 12.1%, its lowest point since March.

From the payroll survey, the 245,000 increase in jobs reflected a 27,000 rise in factory sector employment, which followed a 33,000 increase in October. It was the smallest rise since May. Construction sector employment also rose 27,000, the smallest increase in three months. Mining & logging sector employment edged 1,000 higher (-13.9% y/y).

In the private service sector, employment rose a weakened 289,000 as the number of trade, transportation and utilities jobs rose a lessened 121,000 (-3.3% y/y) reflecting a 34,700 decline (-3.7% y/y) in retail trade employment. Leisure & hospitality jobs increased just 31,000 (-19.8% y/y) following four months of triple digit increases. Professional & business services employment gained 60,000 (-4.7% y/y), the weakest rise of the last seven months. Hiring of temporary workers slackened to 32,200 (-9.8% y/y) from 123,000 in October. Education & health care services employment improved 54,000 (-4.4% y/y) after rising 337,000. Financial services employment improved 15,000 (-0.8% y/y) last month, half that in October.

Government sector employment declined 99,000, the third consecutive monthly drop. Federal government employment fell 86,000 (+1.7% y/y) in November and 142,000 in October with the exit of  241,000 Census workers over the two months. State government employment held steady (-6.3% y/y) following two straight 67,000 declines. Local government employment fell 13,000 (-6.2% y/y), the smallest of three consecutive declines.

The 0.3% increase in average hourly earnings reflected a 0.4% rise (3.3% y/y) in factory pay which followed two months of decline. Construction sector pay rose 0.3% (2.7% y/y), the largest increase since July. A 0.3% increase (4.7% y/y) in private service sector earnings was led by a 0.6% increase (6.9% y/y) in financial services pay which came after October's 1.2% jump. Education & health services earnings gained 0.5% (3.1% y/y) while professional & business services earnings improved 0.2% (3.4% y/y). Trade, transportation & utilities earnings improved 0.2% (3.9% y/y) but retail earnings held steady (5.4% y/y). Leisure & hospitality earnings slipped 0.1% (+1.7% y/y) following two straight 0.2% increases.

Hours-worked in the private sector held steady at 34.8 for the third straight month. Mining & logging sector hours improved to 44.5, but they still were down from last year's average of 46.2. Construction sector hours rose m/m to 38.9, the highest in six months. Factory sector hours eased to 40.3 but remained up from 38.0 in April. Overtime factory hours eased to 3.1, but remained above April's 2.1 low.

Private service sector hours eased to 33.7, down from the 33.8 record high reached in May. (The series dates back to 2006.) Financial sector hours held at 37.8 and matched their record in October 2018. Information sector hours held at an elevated 36.8, while professional & business service hours were steady at the record 36.6. Education & health hours also held at the record 33.5 but leisure & hospitality eased to a still high 25.8.

From the household survey, the decline in the unemployment rate to 6.7% during November occurred as the labor force participation rate eased m/m to 61.5%. It remained down from 63.4% in February. The teenage participation rate eased slightly to 35.9%. For those aged 20-24, it slipped to 70.8%, but still as higher than April's low of 64.5%. For workers aged 25-54, the rate eased to 80.9% and remained down from the January high of 83.1%. For men aged 25-54, the rate fell to 87.4% and remained down from the 89.3% high sustained nine months earlier. For women of that age, the rate fell minimally to 74.5% and remained well below its February record high of 77.0%. For workers aged 55 & over, the participation rate held at 38.7%.

The employment/population ratio for all workers eased m/m to 57.3% in November but remained up from April's low of 51.3%, though sharply lower than January's high of 61.2%. The average duration of unemployment rose to 23.2 weeks, up from 6.1 weeks in April.

The teenage unemployment rate edged higher to 14.0% from 13.9% and remained below the record 31.9% in April. The rate for workers aged 20-24 fell to 10.5%, down from the April record of 25.7%. For workers aged 25-54, the rate declined m/m to 6.0%, down from the 12.8% April high. For those over 55, the jobless rate rose to 5.8% but was below the record 13.6% in April.

By educational attainment, the rate of unemployment of workers without a high school diploma fell sharply to 9.0%, down from 21.2% in April. High school graduates without any college were 7.7% unemployed last month, down from April's high of 17.3% but higher than the 3.6% in February. Those with some college but no degree were 6.3% unemployed, down sharply from the 15.0% April peak but still up from last December's near-record low of 2.7%. College graduates experienced a steady 4.2% unemployment rate in November, still significantly higher than its 1.9% low in February.

The employment & earnings data are collected from surveys taken each month during the week containing the 12th of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.