Jobless rate at 7.7% as seekers drop out

WASHINGTON — The nation’s unemployment rate fell to a four-year low of 7.7 percent in November as employers added an unexpectedly large but still moderate 146,000 jobs over the month despite the disruptions caused by Hurricane Sandy.

The rate declined from 7.9 percent in October, mainly because more people stopped looking for work and weren’t counted as unemployed.

The Labor Department’s report Friday was mixed, but the data suggested that the job market is gradually improving, economists said.

“There is some decent momentum in the economy now, which we’re going to need coming into next year when one way or another there is some amount of fiscal drag,” said Jerry Webman, chief economist at New York based Oppenheimer Funds Inc. “This is modestly encouraging.”

Investors appeared pleased with the report, though the market gave up some early gains. The Dow Jones industrial average ended the day up 81.09 points at 13,155.13.

November’s job gains were about the same as the average monthly increase this year of about 150,000. Most economists are encouraged by the job growth because it’s occurred even as companies have reduced investment in heavy machinery and other equipment.

“The good news is not that the labor market is improving rapidly - it isn’t - but that employment growth is holding up despite all the fears over the ‘fiscal cliff,’” said Nigel Gault, an economist at IHS Global Insight.

Friday’s report did include some discouraging signs. Employers added 49,000 fewer jobs in October and September combined than the government had initially estimated.

And economists noted that the unemployment rate would have risen if the number of people working or looking for work hadn’t dropped by 350,000.

The government asks about 60,000 households each month whether the adults have jobs and whether those who don’t are looking for one. Those without a job who are looking for one are counted as unemployed. Those who aren’t looking aren’t counted as unemployed.

A separate monthly survey seeks information from 140,000 companies and government agencies that together employ about one in three nonfarm workers in the United States.

Many analysts thought Sandy would hold back job growth significantly in November because the storm forced restaurants, retailers and other businesses to close in late October and early November.

It didn’t. The government noted that as long as employees worked at least one day during a pay period - two weeks for most people - its survey would have counted them as employed.

Yet there were signs that the storm disrupted economic activity in November. Construction employment dropped 20,000. And weather prevented 369,000 people from getting to work - the most for any month in nearly two years. These workers were still counted as employed.

There were 12 million unemployed people in November, about 230,000 fewer than the previous month. That’s still many more than the 7.6 million who were out of work when the recession officially began in December 2007.

The number of Americans who were working part time in November but wanted full-time work declined. And a measure of discouraged workers - those who wanted a job but hadn’t searched for one in the past month - rose slightly.

Those two groups, plus the 12 million unemployed, make up a broader measure that the government calls “underemployment.” The underemployment rate fell to 14.4 percent in November from 14.6 percent in October. It’s the lowest such rate since January 2009.

Since July, the economy has added an average of 158,000 jobs a month. That’s a modest pickup from an average 146,000 in the first six months of the year.

In November, retailers added 53,000 positions. Temporary-help companies added 18,000. Education and health care also gained 18,000.

Auto manufacturers added nearly 10,000 jobs. Still, overall manufacturing jobs fell 7,000. That was pushed down by a loss of 12,000 jobs in food manufacturing that likely reflects the layoff of workers at Hostess.

Paul Ashworth, an economist at Capital Economics, noted that hiring by private companies was actually better in October than the government first thought. The overall job figures were revised down for October because governments themselves cut about 38,000 more jobs than was first estimated.

The U.S. economy grew at a solid 2.7 percent annual rate in the July-September quarter. But many economists say growth is slowing to a 1.5 percent rate in the October-December quarter, largely because of the storm and threat of the fiscal cliff, automatic spending cuts and tax increases set to go into effect in January unless Congress acts before then.

The storm held back consumer spending and income, which drive economic growth. Consumer spending declined in October, the government said. And work interruptions caused by Sandy reduced wages and salaries that month by about $18 billion at an annual rate.

And the improvement in hiring bodes well for the Christmas shopping season and indicates Americans will keep up the spending that makes up 70 percent of gross domestic product.

Coupled with improvements in housing, the report indicates the economy will be better placed to weather federal budget cuts and tax increases that may occur next year even if lawmakers agree on reducing long-term budget deficits.

Information for this article was contributed by Christopher S. Rugaber of The Associated Press; by Don Lee of the Tribune Washington Bureau; and by Shobhana Chandra of Bloomberg News.