The American economy hit a speed bump in November as hiring unexpectedly dipped before the holiday season, a sign that companies are cautious about prospects for growth.
Employers added 210,000 jobs last month on a seasonally adjusted basis, the Labor Department reported Friday. While the data was collected well before the Omicron variant emerged, the figures underscore the economy’s fragility as the pandemic persists.
Despite the weaker-than-expected number for job growth — economists had forecast a second straight gain of more than 500,000 — the unemployment rate fell to 4.2 percent from 4.6 percent.
The monthly report from the Bureau of Labor Statistics is based on two separate surveys, one polling households and the other recording hiring among employers. As is the case from time to time, the two surveys painted somewhat different pictures of the economy.
While the data from establishments was weaker than forecast, the household survey showed the number of employed Americans jumped by more than 1.1 million. And the overall participation rate, which measures the proportion of Americans who either have jobs or are looking for one, rose by 0.2 percentage point to 61.8 percent. The rate for prime-age workers, 25 to 54 years old, also edged up.
“I don’t know that I’ve ever seen such an extraordinary gap between the two surveys,” said Diane Swonk, chief economist for the accounting firm of Grant Thornton in Chicago. “But the details reveal a much more robust labor market than the payrolls suggest.”
The participation rate is now at its highest level since March 2020, she added, and there was a big increase in participation last month among Hispanic men and women, who were among the hardest hit by the pandemic.
Still, the lackluster hiring number was a reminder of the on-again, off-again pattern in the labor market since the pandemic began nearly two years ago. What’s more, job gains in businesses where face-to-face contact is required — like stores, restaurants, bars and hotels — were especially soft.
Retail employment dropped by 20,000 last month on a seasonally adjusted basis, while hiring in leisure and hospitality industries rose by 23,000, compared to a gain of 170,000 in October. The white-collar sector, which has largely shrugged off the worst effects of the pandemic, remained a source of strength, with a 90,000 jump in employment in professional and business services.
Hiring at factories jumped by 31,000, while transportation and warehousing gained nearly 50,000 workers, an indication of how online commerce ahead of the holidays is picking up speed.
While there are all sorts of data quirks to note and caveats about not putting too much stock in one report, this month’s more modest job numbers are evidence “that we may be slowing a little from the big numbers of summer,” said Aaron Sojourner, a professor at the University of Minnesota and a former economist at the Council of Economic Advisers for the previous two administrations.
An unemployment rate near 4 percent may have been widely considered full employment a decade ago by most economists. But many labor market analysts argue that there’s much room from employment growth because, despite the virus threat, businesses overall are in a sturdy financial position with the capacity to expand both supply and their payrolls.
“To me, the most important question in the economy going forward is: Will companies improve jobs enough to entice people back into employment, and to face those higher risks?” Mr. Sojourner said. “The big wild card is the virus and our public health efforts, and second is the Fed and how they adjust.”
Throughout the fall, the economy’s path has been characterized by clashing signals.
The “quits rate” — a measurement of workers leaving jobs as a share of overall employment — has been at or near record highs, which suggests that workers are confident they can navigate the labor market to find something better. But the University of Michigan’s survey of consumer sentiment dropped to levels not seen since the sluggish recovery from the recession of 2007-9.
The report noted “the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.” Shoppers are facing the steepest inflation in 31 years. In October, prices increased 6.2 percent from a year earlier.
Nonetheless, markets remain relatively calm. The major stock indexes are up by impressive levels this year. And bond yields, which tend to move higher in inflationary environments, remain near record lows, indicating that investors don’t see inflation as a longer-term threat to the economy or financial stability.
In recent days, the chair of the Federal Reserve, Jerome H. Powell, has faced pressure from different political camps to focus more tightly on price increases.
Critics of the Fed say the central bank’s “accommodative” bond-buying policies — which have kept borrowing costs low and led to a large and continued increase in the money supply — went on too long and were irresponsible in light of an already aggressive emergency response from Congress. With inflation proving more stubborn than many experts expected, that suite of stimulative monetary policies is now, in the view of Fed detractors, a prime culprit.
Fed officials, including Mr. Powell, still maintain that the price increases mainly reflect pandemic aberrations that will dissipate. But in congressional testimony on Tuesday, Mr. Powell signaled a pivot from revitalizing the economy to keeping a lid on prices.
“The economy is very strong, and inflationary pressures are high,” he said. “It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases.”
Economists are divided over the potential impact of a winter coronavirus surge. Some say it could cool off the economy, easing inflation, because it could inhibit in-person activities. Others say a new wave could raise prices further by complicating the logistics of supply chains.
John C. Williams, president of the Federal Reserve Bank of New York, told The New York Times on Wednesday that the new variant could “mean a somewhat slower rebound overall” yet “increase those inflationary pressures, in those areas that are in high demand.”
For consumers, one potentially positive effect of renewed virus fears is the recent pullback in energy prices, which have risen substantially this year. The spikes have been particularly intense for fuel oil — which is used for industrial and domestic heating — and for crude oil, which directly translates to gasoline prices at the pump.
One cure for increasing prices is for consumers’ take-home pay to keep up with them. And with many businesses eager to attract workers, wages for nonsupervisory workers continued their upward climb. Average hourly earnings were up 8 cents in November, to $31.03, and are 4.8 percent higher than a year ago.