November 2020 Jobs Report Shows Modest Growth

The U.S. jobs report revealed the gradual moderation in payroll growth that the markets had assumed, though the workweek stayed firm at a 20-year high of 34.8 for a third consecutive month. This allowed a respectable 0.3% rise for hours-worked after no prior revisions that sat only modestly below our assumptions, leaving a 7-month string of out-sized gains. Hourly-earnings rose by a sturdy 0.3% that allowed the y/y gain to remain at October’s 4.4% (was 4.5%).

For payrolls, a 245k headline rise followed 11k in upward revisions, alongside a 344k private payroll rise with 9k in upward revisions.

The headline payroll gain was restrained by a -99k drop in government employment after 2k in upward revisions, thanks to a likely -93k unwind of Census workers, alongside -16k drop in state and local education employment.

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Jobs in the goods sector rose 55k, while the service sector added 286k jobs. For the goods sector breakdown, we saw gains of 27k for both factories and construction, and a 1k rise for mining. We saw a flat hours-worked figure for the goods sector, with gains of 0.6% for construction and 0.1% for mining, but a -0.3% drop for factories that was disappointing. We saw a flat hours-worked figure for the private service sector.

The household survey revealed November declines of -400k for civilian employment and -74k for the labor force, leaving a jobless rate drop to 6.69% from 6.88%. The labor force participation rate fell to 61.5% from 61.7%.

Payrolls over the May-November period have now reclaimed 57% of the jobs lost in March and April, while hours-worked have reclaimed 68% of the drop. The 33.1% Q3 GDP gain reclaimed 66% of the Q1-Q2 drop.

Overall, the jobs data confirm a modest slowing in economic growth into November, with a lean path for factory hours work, though with continued underlying strength via the workweek and hours worked overall that will assure a solid GDP gain in Q4, even if the slowing pattern poses downside risk for Q1.