The U.S. labor market weakened dramatically in November, as a fresh wave of the coronavirus put the brakes on hiring across the country.
Nonfarm payrolls grew by only 245,000 through the middle of the month, a sharp slowdown from October. October’s job gains were also revised down to 610,000 from an initial estimate of 638,000. Analysts had expected an increase of 469,000.
The sharp slowdown in hiring is likely to put extra pressure on Congress to agree a fiscal relief package during the ‘lame duck’ session before the inauguration of Joe Biden in January.
The thought that a weaker-than-expected report could tip Senate Republicans into accepting a bigger stimulus package than the $500 billion proposed by Leader Mitch McConnell helped to support stock futures after the announcement. Dow futures initially spiked higher, but quickly retraced their gains and by 8:55 AM, they were at 30,026 points, some 15 points below where they were immediately before the release.
The net addition of jobs was the smallest in the six months since May, when an unprecedented wave of layoffs followed the first lockdowns of the pandemic. That will reinforce suspicions that the rebound in the economy since May is running out of steam, as millions of Americans lose their entitlement to enhanced unemployment benefits while companies in the worst-hit sectors step up the pace of layoffs. The retail sector notched a decline of 35,000 jobs in the month, the Labor Department said in its report.
The unemployment rate fell by more than expected nonetheless, to a post-pandemic low of 6.7%. The so-called U6 jobless rate, which measures under-employment across the economy more broadly, edged down to 12.0% from 12.1%.