Analysts were pleasantly surprised to find a November jobs report that showed a small drop in unemployment; from 7.9% in October to 7.7%. This brings unemployment in the US to its lowest point in 4 years. The report is contrary to the expectations of many economists who were predicting a negative economic impact from Tropical Storm Sandy coupled with the seemingly deadlocked debates on the federal budget, and consistent with the monthly reports seen over the last year.
“The underlying trend in unemployment is downward, and that’s what we continued to see in the November figures,” said Dean Maki, chief United States economist at Barclays Capital. “Over the past year, unemployment has fallen a full percentage point and is now down 2.3 percentage points from its high in 2009.”
Some continue to be cautious; pointing out that part of the drop in unemployment is due to the decrease in the labor force by 350,000. The number of people saying they had a job actually fell by 122,000. Economist Ryan Wang of HSBC called the report “stronger than feared but does not materially change the outlook for the labor market.”
Additional data shows that the economic impact of “Superstorm” Sandy was not nearly as significant as anticipated. There was a jump in claims for unemployment benefits in New York and New Jersey last month, but the rise was short-lived. “Our analysis leads us to conclude that Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November,” said acting commissioner John Galvin of the Bureau of Labor Statistics.