Washington, DC, Dec. 5--The unemployment rate dropped to an eight-month low in November even as employers slowed the pace of hiring.
The unemployment rate fell a tenth of a percentage point to 5.9%, the lowest level since March, when it was at 5.8%, the Labor Department said Friday. Nonfarm business payrolls grew by a net 57,000 last month, raising the total of job gains since July to 328,000.
Economists had expected a heftier payroll gain of 150,000, and for the unemployment rate to hold at 6%, according to a survey by Dow Jones Newswires and CNBC.
Over the last three years, employers have cut more than three million private-sector jobs. In order to replace those jobs and sustain the recovery, most economists are looking for monthly payroll gains in the neighborhood of 200,000 to 300,000.
Ed McKelvey, an economist with Goldman Sachs & Co. in New York, puts that number at more like 400,000. That far exceeds the average of the late-1990s economic boom.
In a speech last month, Federal Reserve Vice Chairman Roger Ferguson said, "Even if the growth is sufficient to make meaningful progress in reducing the slack in our nation's labor and capital resources, that pool of underutilized resources is large and it will take some time to be worked off completely." Most forecasters, as a result, don't expect the central bank to begin raising interest rates at least until the middle of 2004.
In its report Friday, the Labor Department revised its estimates of job growth for September and October, saying employers added 137,000 jobs in October--11,000 more than previously thought. But the job gains in September were smaller than first thought--an increase of just 99,000 that was smaller than the first estimate by 26,000.
In November, employers expanded payrolls in most major categories except manufacturing and retail trade.
The manufacturing industry, which has been among the hardest hit and slowest to recover, lost 17,000 jobs, which was 3,000 more than were lost in October. November marked the 39th straight month of job losses in the industry. But the pace has slowed significantly since the early bloodletting, which offers some hope that the sector will soon stabilize.
The retail trade industry shed 28,000 jobs due to grocery-store strikes in California and other states.
Meanwhile, the service-providing industry added 64,000 positions last month, fewer than half the 145,000 jobs that were added a month earlier. That included a 20,000 increase in professional and business-services positions, which have grown for three consecutive months. The education and health-services industries added 34,000 jobs, fewer than the 56,000 added in the previous month.
The average work week expanded for a second consecutive month, increasing by six minutes to 33.9 hours. That marked the highest level since September of 2002 and suggested that employers are going to have to start hiring in greater numbers to meet demand.
Average hourly earnings rose one cent to $15.46.
