Payrolls data mixed

Nov Payrolls rose by 120k, 140k of which were in the private sector, both slightly less than expected but the prior two months were revised up by a net 72k. The avg monthly ytd job gains are now 132k. The unemployment rate unexpectedly fell to 8.6% because a 278k gain in the household survey was in addition to a large drop of 315k in the labor force, the most since Jan. The all in rate fell to 15.6% from 16.2%. Also, the participation rate fell to 64% from 64.2%, .1% from the lowest since 1984. Thus, the drop in the unemployment rate is for mixed reasons. Discouragingly, avg hourly earnings fell by .1% and the y/o/y gain is 1.8%, matching the slowest since Dec ’10 and compares to headline inflation running at 3.5%. The avg workweek was unchanged and the avg duration of unemployment rose to 40.9 weeks, the highest on record. Mfr’g added 2k jobs. Also adding were in retail, financial, temp, education/health, and leisure. The government shed a net 20k jobs with most on the state and local side. Bottom line, including the revisions, payroll growth was better than expected and from a headline perspective, the drop in the unemployment rate reads well but under the hood, the stats are more mixed as less people are in the labor force, a smaller amount of the population is thus working with wage growth below the rate of inflation and those unemployed are so for the most amount of time ever.

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