The pace of job growth slowed in November, as U.S. nonfarm payrolls increased by just 245,000 (versus expectations of 460,000), following gains of 711,000 and 610,000 in September and October, respectively. Some of the weakness in November was due to the loss of temporary government Census workers, but private payroll growth also slowed in the month. On a cumulative basis, the labor market has added about 12.3 million jobs since May, more than half the 22.2 million lost in March and April. However, the labor market is still a long way from a full recovery as more than 10.7 million people remain unemployed. Nevertheless, the unemployment rate declined to 6.7% in November (in line with expectations) from 6.9% in October and has improved significantly from the peak of 14.7% in April. Workers who classified themselves as employed but absent from work in November continued to understate the unemployment rate by about 0.4%. The U-6 underemployment rate, which includes those who are marginally attached to the labor force and employed part time for economic reasons, remained high but eased slightly to 12.0% in November from 12.1% in October. However, the labor participation rate declined to 61.5% in November from 61.7% in October, as about 400,000 people dropped out of the workforce in November. On a year-to-date basis, the size of the civilian workforce is lower by about 4.1 million participants. Given a resurgence of the virus across the US, we believe the labor market is likely to remain challenged over the near-term. With pandemic-related unemployment benefits set to expire at year-end, there is mounting pressure on Congress to negotiate another fiscal relief bill.

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