At first glance, the unemployment figures released last week look like good news for the economy and the jobless.
A dip in the national rate from 7.9 percent to 7.7 percent the lowest level in four years indicates a slowly growing economy. According to Labor Department data, employers added 146,000 jobs in November even though analysts had been expecting a decline in monthly job creation due to Superstorm Sandy. However, the department said it did not substantially affect the national employment and unemployment estimates for November.
Some economists, though, are skeptical of the departments assessment of Sandys impact. We know (Sandy) had an impact at least for a period of time, said J.P. Morgan chief economist Bruce Kasman.
The state unemployment numbers later this month could reflect a more accurate impact of Sandy especially on the Northeast.
The Labor Department also revised downward its job creation data for September and October to show 49,000 fewer jobs created. The November jobs data also show some areas of weakness. The service sector added jobs, but the 50,000 new jobs in the retail sector, mainly to meet shopping demands in the holiday season, might not be duplicated this month. And after the holiday season passes, the industry will be laying off seasonal workers without sustained consumer spending. Also, the construction and manufacturing sectors lost jobs.
A leading measure of consumer confidence as an indicator of their willingness to spend also declined this month.
Also troubling in the report was the decline in those seeking employment, which helped draw down the rate. Economist say the size of the labor force dropped by 350,000 in November due in part to long-term unemployed who have quit looking for work.
Were not at the point in which the jobs market is strong enough to pull discouraged workers back into the labor market, said Nigel Gault, an economist with IHA Global Insight.
Economists say the pace of job growth is not enough to significantly lower unemployment in a still weak economy. Looming over it is Washingtons impasse over deficit reduction and the fiscal cliff at the end of the year that, if left unresolved, could wipe out job gains and send the economy back into a recession.