The American economy hit a speed bump in November as hiring unexpectedly dipped before the holiday season, a sign that companies are cautious about prospects for growth.
Employers added 210,000 jobs last month on a seasonally adjusted basis, the Labor Department reported Friday, well below the half-million gain that had been expected. While the data was collected well before the Omicron variant emerged, the figures underscore the economy’s fragility as the pandemic persists.
Despite the weaker-than-expected number for job growth — economists had expected a second straight gain of more than 500,000 — the unemployment rate fell to 4.2 percent from 4.6 percent.
The monthly report from the Bureau of Labor Statistics is based on two separate surveys, one polling households and the other recording hiring among employers. As is the case from time to time, the two surveys painted somewhat different pictures of the economy.
While the data from employers was weaker than forecast, the household survey showed the number of employed Americans jumped by more than 1.1 million. And the participation rate, which measures the proportion of Americans who either have jobs or are looking for one, rose by 0.2 percentage point to 61.8 percent.
What to Know About Inflation in the U.S.
Still, the lackluster hiring number was a reminder of the on-again, off-again pattern in the labor market since the pandemic began nearly two years ago.
Throughout the fall, the economy’s path has been characterized by clashing signals.
The “quits rate” — a measurement of workers leaving jobs as a share of overall employment — has been at or near record highs, which suggests that workers are confident they can navigate the labor market to find something better. But the University of Michigan’s survey of consumer sentiment dropped to levels not seen since the sluggish recovery from the recession of 2007-9.
The report noted “the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.” Shoppers are facing the steepest inflation in 31 years. In October, prices increased 6.2 percent from a year earlier.
Nonetheless, markets remain relatively calm. The major stock indexes are up by impressive levels this year. And bond yields, which tend to move higher in inflationary environments, remain near record lows, indicating that investors don’t see inflation as a longer-term threat to the economy or financial stability.
In recent days, the chair of the Federal Reserve, Jerome H. Powell, has faced pressure from different political camps to focus more tightly on price increases.
Understand the Supply Chain Crisis
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Almost anything manufactured is in short supply. That includes everything from toilet paper to new cars. The disruptions go back to the beginning of the pandemic, when factories in Asia and Europe were forced to shut down and shipping companies cut their schedules.
Now, ports are struggling to keep up. In North America and Europe, where containers are arriving, the heavy influx of ships is overwhelming ports. With warehouses full, containers are piling up. The chaos in global shipping is likely to persist as a result of the massive traffic jam.
Critics of the Fed say the central bank’s “accommodative” bond-buying policies — which have kept borrowing costs low and led to a large and continued increase in the money supply — went on too long and were irresponsible in light of an already aggressive emergency response from Congress. With inflation proving more stubborn than many experts expected, that suite of stimulative monetary policies is now, in the view of Fed detractors, a prime culprit.
Fed officials, including Mr. Powell, still maintain that the price increases mainly reflect pandemic aberrations that will dissipate. But in congressional testimony on Tuesday, Mr. Powell signaled a pivot from revitalizing the economy to keeping a lid on prices.
“The economy is very strong, and inflationary pressures are high,” he said. “It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases.”
Economists are divided over the potential impact of a winter coronavirus surge. Some say it could cool off the economy, easing inflation, because it could inhibit in-person activities. Others say a new wave could raise prices further by complicating the logistics of supply chains.
John C. Williams, president of the Federal Reserve Bank of New York, told The New York Times on Wednesday that the new variant could “mean a somewhat slower rebound overall” yet “increase those inflationary pressures, in those areas that are in high demand.”
For consumers, one potentially positive effect of renewed virus fears is the recent pullback in energy prices, which have risen substantially this year. The spikes have been particularly intense for fuel oil — which is used for industrial and domestic heating — and for crude oil, which directly translates to gasoline prices at the pump.