Private Payrolls Show Middling Growth

Private nonfarm payrolls rose 140,000 last month, the Labor Department reports. That’s ok and it’s certainly far enough above zero to keep chatter about an imminent recession at bay. But today’s number is a bit of a disappointment after ADP’s strong report on Wednesday, which implied that the government's estimate of employment growth would be much higher. Still, beggars can't be choosy and a net gain of 140,000 private sector jobs is respectable given all the headwinds from Europe these days.

Even so, November's payrolls growth is middling at best, as the chart below shows. The average monthly increase in private sector jobs so far this year through last month is a moderate 156,000, which puts November's report slightly below average.

Meanwhile, the unemployment rate dropped to 8.6% in November from 9.0% previously. That's the lowest jobless rate since March 2009. The change looks impressive, although it's not really clear how much of the fall in the jobless rate is due to genuine growth vs. more jobless workers giving up on the search and thereby falling off the radar of official surveys. In any case, an 8.6% unemployment rate is still unusually high and it reflects continued stress in the economy. But in an age of diminished expectations the fall is sure to be cited as a harbinger of better times ahead.

As for the job growth last month, virtually all of it came from the services sector. Meantime, the cyclically sensitive goods-producing industries lost jobs for the second month in a row, albeit marginally so. Government payrolls also posted another decline last month—a 20,000 loss overall, which is why the more widely monitored total nonfarm payroll tally advanced only by 120,000 last month.

Overall, there's nothing particularly inspiring about today's employment news, although there's enough forward momentum to at least keep the risk of a new recession to a minimum. Assuming, of course, the euro crisis doesn't worsen and the folks in Washington don't make any cyclically self-defeating decisions. Both of those factors are, well, skating on thin ice at the moment.

Paul Ashworth, an economist at Capital Economics, expects that the U.S. economy will grow by 2.5% in this year's fourth quarter, AP reports. "But he expects growth to slow to 1.5 percent in 2012, partly because of the crisis in Europe. And if Congress fails to extend the Social Security tax cut and long-term unemployment benefits this month, growth is likely to slow even further."

Nonetheless, labor market expansion, mild though it is, remains the strongest inoculation against a new recession—if we can keep it going. For the moment, we dodged another bullet.