US labor market contracts; jobless rates flirt with pre-pandemic lows

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US labor market contracts; jobless rates flirt with pre-pandemic lows

On Friday, the US Labor Department’s closely monitored employment report had unveiled that employment roles in the world’s largest economy had contracted significantly on November in context of a surprisingly higher job losses in retailing alongside local government education sectors, though unemployment rate had dropped to a fresh 21-month low of 4.2 per cent, illustrating a rapidly tightening US labor market.

Aside from that, a relatively upbeat US employment data from Labor Department for November came against the backdrop of an ADP National Employment report that had shown US private employers had created 534,000 positions last month, while workers’ average wages and working hours had witnessed a torrential high-tide, suggesting a likely growth in consumer spending late in the year despite a scorching rise in inflation indicators.

Nonetheless, highlighting the US economy might be close to full employment given the growth momentum in job market, but still a 3.9 million positions remained unfilled compared to a pre-pandemic peak reached on February 2020, a Chief Economist at FWDBONDS in New York, Christopher Rupkey said, “Don't be fooled by the measly payroll jobs gain this month because the economy's engines are actually in overdrive as shown by the plunge in joblessness”.

On top of that, analysts also had underscored possibilities of permanently losing millions of pre-pandemic positions, as labor market has been contracting faster-than-anticipated.

US unemployment rate falls to 21-month low

According to latest US Labor Department employment survey, US nonfarm payrolls had added 210,000 roles last month, marking off the lowest gain since December 2020, however, September and October nonfarm payrolls data had revised higher by 82,000 positions, signaling a strengthening in US labor market with unemployment rate tumbling to 4.2 per cent.

A whopping 6.1 million new jobs were created this year thus far, while unemployment rate fell by 201 bps (basis percentage points) compared to a 6.3 per cent as of December 31, 2020.