November Jobs Report Shows Signs of Cooling With Slowing Growth

December 4, 2020

The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor Senior Economist Daniel Zhao:

As the pandemic surges, the labor market recovery is clearly decelerating and cracks are beginning to show. Unemployment dropped to 6.7 percent and employers added 245,000 jobs as Americans continued to flow back into the labor force, according to today’s report from the Bureau of Labor Statistics. However, today’s report may be the calm before the storm as Americans buckle down for a harsh winter with the pandemic reaching new heights.

Rehiring of Furloughed Workers Buoys Recovery For Now

The number of workers on temporary layoff dropped to 2.8 million in November from 3.2 million in October. The reduction in workers on temporary layoff is significantly smaller than in previous months in a sign that the recovery is not insulated from the recent spike in COVID-19 cases. Additionally, even at this slower rate, workers on temporary layoff will be largely rehired in a matter of months. Pulling permanently laid-off workers back onto payrolls will be a taller order, especially as permanent layoffs continue to increase, rising to 3.7 million in November.

Pace of Payroll Gains Continues to Slow

Payroll employment increased 245,000 in November, down from a 610,000 job gain in October. 93,000 Census temporary workers rolled off payrolls in November, artificially lowering job gains, but even private payroll growth slowed significantly to 344,000 from 877,000. Payroll employment is still 9.8 million short of pre-crisis levels—at November’s pace, it would take until 2024 to return to pre-crisis employment levels. 

November Hiring Shows E-Commerce Shift

Transportation and warehousing gained 145,000 jobs while retail trade payrolls dropped by 34,700 jobs on a seasonally-adjusted basis as the pandemic shifts holiday spending to e-commerce. Service-providing industries like retail trade and leisure & hospitality (+31,000 jobs added) that were hard-hit by the pandemic early on saw a significant deceleration in November as the pandemic presses on. 

Vaccine Offers Light at the End of the Tunnel

Today’s report is a firm reminder that we’re not out of the woods yet. Even though the vaccine offers a light at the end of the tunnel, we have a long and potentially difficult winter ahead. The impending vaccine also makes it all the more important that we mitigate health and economic harm in the coming months. Congressional action is critical to keeping Americans above water in what is hopefully the final stretch of the pandemic.

More Insights

The unemployment rate dropped to 6.7 percent, slightly more than expected. However, this is against the backdrop of a declining labor force with those not in the labor force increasing by 560,000 and the number employed actually falling by 74,000.

Temporary layoffs dropped to 2.8 million in Nov, a 441,000 month-over-month decline. This is a significant slowdown from recent months when temporary layoffs dropped by over a million per month. This could be indicator employers are turning to furloughs again as the pandemic surges.

Payroll gains of 245,000 is a pace more in line w/ pre-pandemic job gains which is concerning when we’re still 9.8 million in the hole. Recovering 9.8 million jobs at a November’s pace would take until 2024 to return to pre-crisis levels.

There’s an e-commerce story in the payroll data: retail lost 35,000 jobs on a seasonally-adjusted basis while transportation & warehousing added 145,000. That was largely driven by couriers & messengers (+82,000), warehousing & storage (+37,000) and truck transportation (+13,000).

On a non-seasonally adjusted basis, the November retail numbers are the weakest since the Great Recession. An optimistic take would be that retailers shifting to e-commerce and away from Black Friday might be looking to hire more in December.

Most industries are still significantly below pre-crisis levels of employment, though the slowdown in leisure & hospitality (+31,000 jobs added in November, down from +270,000 in October) and retail (-35,000, down from +95,000 in Oct) shows that rehiring is stalling as the pandemic surges.


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