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December's Employment Situation - November Undone

Since the middle of the year changes in the unemployment rate have reflected labor force developments more than job growth developments.

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Teak Warehouse Came America

The unemployment rate rose from 9.6 percent in October to 9.8 percent in November. This may be disappointing but not disastrous. The move reflected changes in the labor force more than changes in job growth. This month it's the same story but in the opposite direction.

The Employment Situation report for December shows a near historic 0.4 percentage point decline in the unemployment rate (July 1983 declined 0.7 percentage points, December 1959 declined 0.5 percentage points). But this improvement has as much to do with a decline in the labor force as with real job growth.

According to the household survey (the source for the unemployment rate), the number of unemployed persons declined by 556 thousand, the combination of an additional 297 thousand persons in the count of those employed and 260 thousand dropping out of the labor force.

It's not all bad news, the October and November numbers were revised upward, adding another 70 thousand jobs and bringing the average for the quarter to 128 thousand per month. But this is still too low to lower the unemployment rate significantly, despite today's surprisingly strong decline.

- Courtesy of NAHB

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December 8, 2019, 8:31 am PDT

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