Even with the looming fiscal cliff and the effects of Hurricane Sandy, the November jobs report contained some encouraging news. The number of jobs created was well above expectations at 146,000.
The sectors that experienced the most growth were retail trade (+53,000), professional and business services (+43,000) and health care (+20,000).
At first glance, the 7.7 percent unemployment rate reported, which is a four-year low, also seems like good news. However, dive a bit deeper and you see that it dropped due to people giving up on finding work and leaving the labor force.
Therefore, similar to recent jobs reports, November proved to be a mixed bag of good news and bad news.
The Good News
Given the economy is experiencing a slow recovery and uncertainty with the impending fiscal cliff, the number of jobs added is promising. It goes to show that employers are not letting the fiscal cliff curtail all hiring efforts and growth is still possible with the uncertainty in Washington.
Retail boasted the largest increase in new jobs at 53,000; more than a third of all jobs created in November. This is unsurprising given the usual retail surge during the holiday season. However, given that last November only 34,000 new retail jobs were added, this increase is a sign of improving economic times. Consumers' confidence is increasing and so too is their discretionary spending, causing a surge in consumerism.
Professional and business services had the next largest increase at 43,000 new jobs. The two sectors within this broad industry with the most new jobs were administrative and waste services (22,000) and computers systems design and related services (7,000).
Health care continues to be an area with strong growth, adding 20,000 new jobs. Over the last three months, more than 97,000 new jobs have been created in the health care industry. The increased demand for health care comes from both changing health care policies, as well as an aging population.
Not only did these industries undergo significant job growth, but they also experienced wage growth in the last year, according to The PayScale Index. Annual wage growth for professional services was 4 percent, while retail and health care were closer to 3 percent.
The Bad News
As mentioned earlier, the drop in the unemployment rate wasn't from people finding jobs, but rather from people who stopped looking for jobs.
Additionally, many of the other barometers of labor market health were essentially unchanged from a year ago. This includes the number of unemployed persons (12 million), the number of long-term unemployed (4.8 million), the number of involuntary part-time workers (8.2 million), the number of people marginally attached to the labor force (2.5 million), and the number of discouraged workers (979,000). While these unchanged numbers are not necessarily bad news, they aren't good news either. The economic recovery has been slow-going and some improvement in these labor market numbers might just be the jolt needed to get it to speed up.
The industry that suffered the most in November was construction, losing 20,000 jobs. Manufacturing also fell by 7,000 jobs. Both industries took huge hits during the Great Recession and have had mild recoveries in recent months. Therefore, these drops are not encouraging signs for the overall recovery.
With this mixed bag of news, it is hard to say what's ahead for the U.S. labor market. However, investors seem to think the good news outweighs the bad as stocks rose after the release of the jobs report.
Katie Bardaro is the lead economist and director of analytics for PayScale.com.
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