The November jobs report is a "wakeup call and a warning.”
That’s according to Indeed’s economic research director Nick Bunker, who sounded the alarm in a note Friday morning after the Department of Labor released the data.
"Progress in the labor market has slowed at the worst possible time," he wrote in a note. "We might be optimistic about the spring, but the winter could bring another round of economic pain."
At first glance, the drop in the unemployment rate to 6.7% from 6.9% in October looks positive. But Bank of America economists observed that this was driven by workers dropping out of the labor force.
Furthermore, the weakness in jobs added (245,000 vs. 610,000 in October) and the fact that permanent job losses are mounting cast a further shadow over the numbers.
“There is still just under 10 million jobs lost since the pandemic started that have not come back,” Allianz’s Charlie Ripley said Friday morning.
Navigating the complicated labor landscape with temporary layoffs brought on by the pandemic is challenging, but Bunker pointed to rising core unemployment as a figure that measures more “enduring unemployment” to tell the big picture story.
“There are some points of improvement, but damage is mounting,” he wrote.
Bank of America economists agreed, pointing out that the number of people unemployed for 27 weeks or more ticked up from 3.6 million to 3.9 million — around 37% of unemployed people, largely workers in the hospitality sector.
The vaccine news is welcome, but workers need help quicker
This is “the only thing that matters about today’s [non-farm payrolls] report,” Academy Securities’ Peter Tchir wrote.
“Is this enough to push a deal forward? Probably, as momentum seemed to be gathering anyway,” he wrote. This was also the conclusion from Allianz’s Ripley as well, who wrote that the report is “beckoning lawmakers to act on additional fiscal stimulus measures in order to bridge the output gap in the economy until a vaccine is deployed.”
“The longer they hold out the wider the gap may become,” he added.
Without more relief from Washington, “millions could be in for a dire winter,” Butler wrote.
But as Ripley put it, none of that will solve the economic crisis that faces the country until the vaccine has been widely distributed and the country heals.
“A vaccine is not a cure-all for the economy. A vaccine will not re-open closed businesses or reimburse lost wages,” he wrote.
And how does next month look? Pantheon’s Ian Shepherdson wrote that he has little reason for optimism, writing that "we’re struggling to think of any good reason to expect a rebound in December."
This appears to be the consensus from labor market observers: The vaccine news is great, but it’s like the HMS Carpathia in the distance. For now, the Titanic needs lifeboats.