Five worrying takeaways from Friday’s U.S. jobs report

(Reuters) – Friday’s big monthly U.S. payroll report was a big disappointment, with around half of the jobs created in November, as economists predicted in a Reuters poll.

But the embarrassing signs for the job market were hardly limited to the disappointing headline number, which showed the weakest job growth since the recovery began after the COVID outbreak-induced fainting 19 earlier this year.

Here are five worrying factors in the report:

HOUSEHOLD VS ESTABLISHMENT: WHO IS RIGHT?

The report is fed by two surveys – one on US businesses and the other on US households. The so-called “establishment” data on total employment in companies are much less noisy than the results of households, but more often the two evolve at least in the same direction.

In November, they didn’t. Businesses said they created 245,000 jobs last month, but households said employment fell by 74,000. This was the first negative draw in this series since the historic plunge in employment in April.

Chart: Who to believe – businesses or households? –

WORK PARTICIPATION PERIOD

Some 400,000 fewer people reported being in the labor force in November, the third drop in the past five months.

A sign of a healthy job market is a constantly growing workforce – those who have a job and those who are in the market for a job. After an initial rebound in May and June, the labor force has shifted sideways since then and remains more than 4 million below what it was before the outbreak of the pandemic.

Graph: The active population is not growing –

MORE DISCOURAGED WORKERS

One of the reasons people give for leaving the job market is that they are too discouraged by the state of the job market to look for work. The ranks of these workers are back near the five-year high reached in July after rising in November for the third consecutive month and the most since June. Chart: The ranks of discouraged workers rise again –

PERMANENT JOB LOSSES ON THE RISE

When the pandemic first struck and caused more than 20 million job losses in a single month in April, the vast majority of those laid off expected their layoffs to be temporary. This dynamic has changed.

In November, more than 4.7 million people were classified as “not on temporary layoff” – meaning their jobs were permanently eliminated or they had completed a temporary job that was not extended. This is nearly 2 million more than those considered temporarily out of work and the highest level in seven years.

Graph: More and more layoffs are becoming permanent –

THE DURATION OF UNEMPLOYMENT IS GROWING FOR LONGER

In February, just before the coronavirus pandemic spread the economy and labor market with it, less than 20% of the 5.8 million people then counted as unemployed had been out of work for 27 weeks or more.

Fast forward to November and nearly 37% of the 10.7 million unemployed Americans had not worked for about six months or more. This percentage is the highest since December 2013.

Chart: Long-term unemployment is a growing problem –