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The latest confirmation of a slack U.S. labor market came with the Dec. 6 release of the November employment report. November nonfarm payrolls dropped 40,000, while the unemployment rate jumped to 6.0% from 5.7%. Both figures were weaker than expected and suggest that labor market conditions remain near the depressed levels we have seen all year.
Overall, though, we at MMS International would note that the underlying trend in the report is not nearly as bad as the headlines make it out to be. The workweek data was more encouraging, as it was unchanged from an upwardly-revised 34.2 hours. And hourly earnings rose 0.3%, which left earnings on a year-over-year basis rising only 3.0% -- though this is a full percentage point below the 4% pace in place at the end of last year.
The three main categories that accounted for the shortfall in jobs relative to estimates were manufacturing, government, and retail trade. Though not surprising given data from the recent ISM report, the 45,000 drop in manufacturing jobs was a little worse than the expected decline of 30,000. The meager 8,000 rise in government payrolls, vs. expectations for a 30,000 gain, could reflect budgetary strains putting a cap on new hiring. And retail trade jobs fell by 39,000, vs. expectations for a 5,000 gain, which reflected lackluster sales estimates damping hiring ahead of the holidays. From MMS International staff analysts