Economy Added Jobs in November; Jobless Rate Drops

December 5, 2003 ( - In a mixed bag of good and bad news, the government reported Friday that the economy created 57,000 new jobs in November - albeit fewer than expected - and the unemployment rate fell.

According to the US Department of Labor (DoL), the new nonfarm jobs performance in November was the fourth straight jobs-creating month and rose from a revised 137,000 for October (See  October Jobs Report Sure to Prompt Smiling Faces ). Wall Street analysts participating in Reuters’ regular survey had been calling for a bumper increase of 150,000 jobs.

A large portion of the November job gains came from a 64,000 increase in service employment. On the other hand, the struggling manufacturing sector, which has been showing signs of recovery, cut jobs for the 40th month in a row. The DoL said grocery store strikes, mainly affecting California, had added up to 20,000 jobs to October’s gain but deducted up to 30,800 workers from November’s number.

In an encouraging sign for the health of the still-stumbling labor market, the November unemployment rate edged down to 5.9% – the lowest level since March – from 6% in October.

Friday’s payroll report isn’t likely to push the Federal Reserve to change its recent interest-rate policy when officials meet to talk about rates next week, analysts said.   The central bank has signaled that with inflation low, it is likely to keep interest rates on hold at a 1958 floor of 1% for some time.

Analysts expect the Fed to wait for signs of a sustained recovery in the jobs market before raising interest rates. The interest-rate issue is important for plan sponsors because many 401(k) plan loans are tied to the prime rate.