The U.S. economy created 146,000 new jobs and the unemployment rate slid to 7.7 percent, in a report much better than economists had expected.
Though most on Wall Street figured Superstorm Sandy to tamp down job growth, the Labor Department said the late-October storm that decimated the East Coast actually had little effect.
The government said the storm’s impact might be more accurately gauged in next months’ report.
Overall, the report was well ahead of forecasts of about 93,000 new jobs, but internally the numbers showed considerable weakness.
“It’s good news against expectations, but that’s about it,” said Steve Blitz, chief economist at ITG Investment Research.
The Labor Department statistics had some puzzling contradictions, particularly in the assertion that Sandy “did not substantively impact” the jobs count for November, and in considerable downward revisions from previous months.
Also, the drop in the unemployment rate appeared to reflect little more than a continued exodus of workers from the labor force.
The labor force participation rate, already around 30-year lows, fell further in the month to 63.6 percent. That represented 350,000 fewer workers.
In all, there were a net 122,000 fewer people with jobs.
An alternative measure of unemployment, which counts those who have given up looking for jobs as well as those working part-time for economic reasons, also edged lower to 14.4 percent.
“Same old, same old. The government managed to get the unemployment rate down by shrinking the labor force and convincing a lot of people they’re better off collecting unemployment benefits or living off welfare than working,” said Peter Schiff, CEO and chief global strategist at Euro Pacific Capital. “It’s more bogus government numbers.”
Economists had been expecting a gain of 93,000 in nonfarm payrolls and a steadying of the unemployment rate at 7.9 percent, though estimates varied widely.
Deutsche Bank’s Joseph LaVorgna, for instance, forecast a gain of just 25,000 positions, due in large part to residual effects from Sandy.
Market research firm TrimTabs, conversely, projected 202,000 new jobs, though it expected the government’s count to be lower.
Previous month’s employment gains were lowered through revisions.
The Labor Department’s initial report for October showed a gain of 171,000 jobs, but now is listed at 138,000. The September gain of 148,000 was taken down to 132,000.
Much of the November gains came in retail, which added 53,000, while professional services grew 43,000.
The closely watched construction industry, however, lost 20,000 jobs, while manufacturing was flat.
“The momentum in hiring we thought we saw after October failed to materialize in November. Sixty percent of the job gains were in retail, health care and amusement – gambling or recreation,” Blitz said. “When I add it all up I get more of the same.”