• The U.S. economy added 210,000 jobs in November, below expectations.
• However, there have been large upward revisions to job growth recently, and there was a large increase in employment in a separate survey of households. This suggests that job growth in November was understated.
• The unemployment rate fell to 4.2% in November from 4.6% in October.
• At the same time there was a large increase in the labor force, encouraging for future job growth.
• Although the headline number was weak, the details of the November jobs report were much better.

The U.S. economy added just 210,000 jobs in November, according to a survey of employers from the Bureau of Labor Statistics. This was well below the consensus expectation of job growth of 500,000. However, job growth was revised higher for October, to 546,000 from 531,000, and in September, to 379,000 from 312,000. Thus, the total upward revision was 82,000. Job growth averaged 378,000 in the three months through November, down from 469,000 in October. The private sector added 235,000 jobs in November, while government employment fell by 25,000.

BLS revisions to job growth in recent months have been upward, and much larger than normal. For example, job growth in August was initially reported at 235,000, but has since been revised to 483,000. And the initially reported gain of 192,000 jobs for September now stands at 379,000. Thus, the slowing in job growth in November should not be taken at face value.

Employment fell by around 22 million in March and April of 2020 as the pandemic came to the United States. Since then, the economy has added back more than 18 million of those jobs, but employment is still by almost 4 million compared to before the pandemic. At the current pace of job growth, employment would return to its pre-pandemic level in mid-2022.

The unemployment rate fell to 4.2% in November from 4.6% in October. The unemployment rate, which was 3.5% in February 2020 before the pandemic, soared to 14.8% in April 2020 with the pandemic. It has been steadily falling since then.

Employment from a survey of households, different from the survey of employers, rose by a huge 1.136 million, the largest increase since October 2020. At the same time the share of adults either working or looking for work (the labor force participation rate) rose by 0.2 percentage point in October to 61.8%, the highest rate since before the pandemic, when the rate was above 63%. The addition of almost 600,000 people to the labor force in November is very encouraging, suggesting that the stronger job market and the gradual ebbing of the pandemic could be drawing more people back into the workforce.

Employment in goods-producing industries rose by 60,000 in November, with increases of 31,000 in both construction and manufacturing. Employment in private service-providing industries rose by 175,000 over the month, with gains of 90,000 in professional/business services and 50,000 in transportation and warehousing. Employment growth in leisure/hospitality services, which had been very strong recently as the industry recovers from the pandemic, rose by only 23,000 in November, and employment in education and health services rose an anemic 4,000. Employment in retail trade fell by 20,000 over the month. The job losses in government were concentrated in localities (down 18,000) and states (down 9,000).

Average hourly earnings rose 0.3% in November from October, the smallest increase since February. The average wage was up 4.8% in November from one year earlier, the same pace as in October. The average workweek increased to 34.8 hours in November from 34.7 hours in October. With more jobs, higher wages, and a longer workweek, aggregate labor income rose a solid 0.7% in November, which likely outpaced inflation over the month. Wage growth was especially strong in leisure/hospitality services and retail trade, indicating that the tight labor market for these workers is leading firms to increase pay.

Although the headline November jobs number was disappointing, the overall report was much better. In recent months the BLS has been consistently revising job growth much higher as more complete employer records become available, and the big jump in November employment in the household survey also indicates that an upward revision is likely. In addition, initial claims for unemployment insurance claims fell sharply in November, and hiring surveys remain strong. All of this indicates that actual job growth in November was much stronger than the preliminary number of 210,000.

The other big piece of encouraging news is the increase in the labor force participation rate. A big factor holding back hiring is a shortage of workers. The continuing pandemic, childcare and schooling issues, more generous social assistance, and early retirements all contributed to a big decline and then slow recovery in the labor force. As of November, the number of people working or looking for work was down by 2.4 million from before the pandemic, and the labor force participation rate was little changed through most of 2021. But the large increase in the labor force in November could be the start of a return to the workforce that would help alleviate some labor market pressures.

And the big drop in the unemployment rate, along with a large increase in the labor force, in unalloyed good news. If more people are starting to look for work again, this would allow for stronger near-term hiring. Increases in vaccination rates, the return to in-person schooling, and the expiration of more generous unemployment insurance benefits in September could all be contributing to the increase in the labor force.

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