In a bit of a surprise turn, unemployment dipped slightly in November. Numbers released this morning show that unemployment fell from 10.2% to 10%, with workers cutting just 11,000 jobs last month. Some had expected as many as 130,000 jobs to be lost, which was roughly the average lost in each of the last three months. The “underemployment” rate fell from 17.5% to 17.2%.
You can read into this data many things. The optimistic will cite this as the beginning of a positive trend, though no trend has really begun. The administration is likely to turn this into a talking point. And in theory this could be the start of unemployment gains.
But that is unlikely. The reality is that the economy remains very weak, and filled with problems. Banking and housing sector problems are going to continue plaguing the market and put pressure on unemployment. Looking at the data, there were some seriously problematic signs despite the overall positive numbers.
Construction and manufacturing both lost jobs in November. The construction losses are likely due to seasonal shifts, but the continued losses of manufacturing jobs mean fundamentals in the economy remain weak. IT and telecommunications lost jobs last month as well.
The major gains were due to 52,000 temporary business workers hired, and the continued rise of employment in the health care industry. According to the Bureau of Labor Statistics, the health care industry has added 613,000 jobs since the recession began two years ago.
The other factor to note is that retail added about 8,000 workers, likely on increased seasonal demand of the holiday shopping time.
We shouldn’t read too much positiveness into the numbers. As long as core services remain down, with limited lending from banks to stimulate industrial sectors of the economy, we will continue to be in a bad state of affairs.