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By Jason Stipp | 12-03-2010 09:58 AM

Why Did November's Job Report Disappoint?

Strong October hiring in retail may have pulled forward some job growth, say Morningstar's Bob Johnson and Vishnu Lekraj, but even more growth is needed to move the unemployment rate.

Jason Stipp: I'm Jason Stipp for Morningstar.

Friday's job report revealed a disappointing gain of only 39,000 jobs in November. This is far fewer than a lot of folks were expecting, and the unemployment rate ticked up to 9.8%.

Here with me to talk about why the report may have disappointed is Morningstar's Bob Johnson, director of economic analysis, and Vishnu Lekraj, he is an equity analyst covering the employment sector.

Thanks for joining me guys

Vishnu Lekraj: Thanks.

Bob Johnson: Thanks.

Stipp: So, Bob, first question for you; in this report, the jobs added were far fewer than you guys expected, than the market expected. What was your take on that headline number and why it was potentially so disappointing?

Johnson: Absolutely, it was a disappointment. There's no doubt about that, and a few things happened. A) they revised the two prior months, so the base that we were starting from was higher, so you naturally would expect that you'd gain just a few less jobs. So, I think that was one reason why the number was disappointing.

Clearly, we'll talk about it a little bit, but retail employment was a big drag on the number, a huge drag, and explains almost all of the disappointment. And that said, we didn't lose a lot of ground during the month, most of the categories were flat, but we didn't gain much, either.

Stipp: I know that some other metric you look at are the work week and the wages. Did you see anything positive there?

Johnson: Frankly, those numbers are pretty much flat. Usually, we get a little better news out of those when the employment number is flat, but everything was flat. I mean, it didn't get worse, but it didn't get better either.

Stipp: So, Vishnu, when you look at the numbers, what sort of trends are you seeing? So, I know that they did revise a couple of months, but still, like we were about 100,000 less than a lot of people expected. What do you make of that?

Lekraj: Well, it's a big disappointment, obviously, but you got to keep into context that when you take a look at what's happened over the past quarter, what we've added, if you average everything out, we are pretty much, month-to-month about 100,000 each month, and that's good news. But again, this month is very disappointing.

We had retail that let people go, is what the report said. Now, that's up for debate. I spoke to some of the retail guys on the floor, and from what they are hearing from the retail companies, the firms they cover is something totally opposite than what was reported in the government report.

So, it won't surprise me if we see over the next couple of months that they do revise these numbers up a tad bit. But again it's not anything to write home about. It's not good.

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