The U.S. unemployment rate dropped to 7.7 per cent in November, the lowest in almost four years, surprising Wall Street economists who had expected Hurricane Sandy to take a far greater toll on hiring last month.
Economists were bracing for a poor showing on the assumption that the storm that devastated New York City, New Jersey and other areas along the Atlantic Coast at the end of October would have crippled businesses, leaving thousands without work.
As it was, the Labour Department said Friday that response rates to its monthly survey were “within normal ranges,” allowing statisticians to conclude the hurricane had little effect on the national numbers. The jobless rate now has stayed below 8 per cent for three consecutive months, the first time that’s happened since the onset of the worst of the financial crisis in early 2008.
Still, these numbers reflect a recovery that is chugging, not racing. A separate survey of non-farm payrolls showed employers added 146,000 jobs last month, an uninspiring pace as most economists say a healthy recovery would see job creation of more than 200,000 on a monthly basis. The Labour Department slashed its payrolls estimate for October to 138,000 from the 171,000 it first reported.
“Given the uncertainty ahead of the release, the fact that the report beat consensus has to be taken with a grain of salt,” Jimmy Jean at Desjardins Securities in Montreal advised clients in a note after the report. “The downward revision for October does not look too great as well.”
The median estimate of Wall Street analysts polled by news agencies before the report was for a payroll gain of 85,000, while Mr. Jean had predicted an increase of 110,000. American employers have added an average of 151,000 positions a month in 2012, about the same rate as last year.
“To overreact on the positive side of this report would be a mistake,” Austin Goolsbee, a professor at the University of Chicago and the former head of President Barack Obama’s Council of Economic Advisers, told Bloomberg Television. “This is good, but only mildly good.”