November 2020 Jobs Report Shows Modest Growth

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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.

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.

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