Unemployment Rate Drops to 7.7 Percent

The economy added 146,000 jobs last month, but it's hard to call the jobs report entirely encouraging.

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A shopper picks through water-damaged shoes at Sneaker Town in Coney Island as the store clears out its inventory damaged by Superstorm Sandy.

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Perhaps more so than any recent jobs report, the November reading on the job market is remarkably subjective.

Today the Labor Department reported that employers added 146,000 jobs in November. That's well above consensus expectations of around 80,000 and is also an improvement from October's 138,000, but only because October's figure was revised down from 171,000. The jobless rate also fell two tenths of a percent, to 7.7 percent, its lowest point in nearly four years. However, that's in part due to a decline in the labor force participation rate. The share of the population with a job actually fell one-tenth of a percent, and an estimated 122,000 fewer people were employed in November than in October.

[ADP: Private Payrolls Added 118,000 Jobs in November]

To top it all off, external factors may have distorted the figures, though it's impossible to know to what extent. In advance of the jobs report, analysts widely expected Hurricane Sandy to significantly drag down job creation, as it shuttered businesses and created devastation in the Northeast. Earlier this week, Mark Zandi of Moody's Analytics estimated that Sandy subtracted 86,000 jobs from ADP's estimate of private payroll growth.

However, the Labor Department reports that the hurricane "did not substantively impact the national employment and unemployment estimates for November."

"Depending on whose telephones were working in the Northeast, it may affect how the unemployment numbers are collected," says Joel Naroff, president and chief economist at Naroff Economic Advisors. The worst effects of Sandy were concentrated in a small part of the country, and the Labor Department reports that response rates in the states hit by the storm were ‘within normal ranges.' "That [the jobless rate] went down raises some questions about who it captured and how well it captured it."

It is also impossible to tell how much the fiscal cliff is dragging on job growth—how many people employers might be hiring without the looming uncertainty of potential tax hikes, spending cuts, and the resulting economic turmoil is simply unknowable.

[Related: Lawmakers Look To Economic Wonks On Cliff]

"Companies don't really say, 'Well we would have hired this many people, but we decided not to,'" says Brad Sorensen, director of market and sector research at the Schwab Center for Financial Research.

Indeed, the nation's employers have things other than Washington on their minds.

"The cliff is a factor, but it is only one of multiple considerations which are weighing on hiring decisions," including slowdowns in Europe and slow economic growth overall, says Patrick O'Keefe, director of economic research at accounting firm CohnReznick. 

"Even if the fiscal cliff were resolved in a very benign and welcome fashion tomorrow, the only thing we'd see is some buoyance in the financial markets," he adds. "Hiring decisions would not go from cautious to robust. They would remain cautious."

Despite the uncertainty, the jobs report does tell us a few things about the job market: It shows that retail is going strong, adding nearly 53,000 jobs last month, and that professional and business services, a broad-ranging group that includes positions like architects and accountants, also continues to fare well, with 43,000 new jobs last month. However, construction, considered an indicator of housing health, subtracted 20,000 jobs. Public employment was also flat, subtracting 1,000 workers.

"It appears to us that things are continuing to improve, [but] not robustly," Sorensen says. Still, he counts strong Black Friday sales and continued improvements in the housing market as signs that there is underlying strength to the economy.

[Photos: Christmas Around the World 2012]

Overall, regardless of what this very mixed jobs report says, the economy appears in the same situation it has been in for months, says O'Keefe: "The overall direction of the economy continues to be the path of slow, somewhat erratic growth."

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