Construction workers fill out job applications last September in Miami. The U.S. unemployment rate has fallen to 8.6 per cent, the lowest since March, 2009.Joe Raedle
The U.S. unemployment rate plunged to 8.6 per cent in November from 9 per cent the previous month.
Before we turn things over to the joy kills, let's acknowledge that this is significant, if only in terms of sentiment.
The 8.6 per cent rate is the lowest since March, 2009. Commentators will now talk about a U.S. jobless rate that is in the neighbourhood of 8 per cent rather than one that is above 9 per cent. They much prefer the sound of that at the White House. "It's steady, but it's coming about," Labor Secretary Hilda Solis said Friday on Bloomberg Television.
Now, let's turn things over to the joy kills.
As is often the case when the unemployment drops at a time of weak economic growth, a significant number of people stopped looking for work, shrinking the work force. In November, the labour participation rate was 64 per cent, down from 64.2 per cent in October. The rate was 63.9 per cent in September.
"It now appears that labor force participation is trending sideways rather than heading upward," HSBC's Ryan Wang observed Friday in an analysis of the latest U.S. employment data. "This is a sign that potential job seekers are still not convinced about their labor market prospects."
Beneath the exciting headline figure, the U.S. jobless report describes an economy that is stable. That is something, given the turmoil in Europe. But the economy only is creating enough jobs to keep up with population growth. In his report, Mr. Wang included this chart:
It shows the number of employed workers as a percentage of the overall population. The deterioration has stopped, but the trend of sluggish job creation of the past two years clearly has yet to be broken.
Mr. Wang includes another informative snapshot:
This one shows that the net percentage of industries adding jobs in November declined to 55 per cent from 60 per cent in October. That's a problem because the construction industry is dormant. That means other industries have to pick up the slack in hiring -- and they aren't doing so.
"Employment growth has stabilized over the past few months and is keeping pace with the growth in the population," Mr. Wang concludes. "However, it is not yet strong enough to promote a rapid improvement in the underlying prospects for job seekers."
Economy Lab, winner of the 2011 Eppy Award for best business blog. Follow Economy Lab on twitter