Small businesses and startups that were skittish about the economy this summer started hiring in bigger numbers this fall, helping drive the unemployment rate down to 8.6% in November, the lowest in two and a half years.
The country added 120,000 jobs last month, the Labor Department said Friday (Dec. 2). The economy has generated 100,000 or more jobs five months in a row – the first time that has happened since April 2006, long before the Great Recession set in.
“Something good is stirring in the U.S. economy,” Ian Shepherdson, an economist at High Frequency Economics, said in a note to clients.
The unemployment report, one of the most closely watched economic indicators, showed that September and October were stronger months than first estimated. For four months in a row, the government has revised job growth figures higher.
Unemployment was 9% in October and has been stuck near or above that level for two and a half years. The last time unemployment was this low was March 2009, two months after President Barack Obama took office.
The government uses a survey of mostly large companies and government agencies to determine how many jobs were added or lost each month. It uses a separate survey of households to determine the unemployment rate.
The household survey picks up hiring by companies of all sizes, including small businesses and startups. It has shown an average of 321,000 jobs created per month since July, compared with an average of 13,000 the first seven months of the year.
“We might finally be seeing new business creation expand again, which is critical to the sustainability of the recovery,” said Diane Swonk, chief economist at Mesirow Financial, a financial services company.
When the economy is improving or slipping into recession, many economists say, the household survey does the better job of picking up the shift because it is more likely to detect small business hiring.
The unemployment report was the latest encouraging indicator for the economy. Other reports this week have shown that factories are producing more, construction is growing, and people are buying more cars.