Consumer-focused industries continued to lead job growth, data showed Friday, but renewed pessimism ahead of the year-end "fiscal cliff" deadline could cool future gains.
Payrolls swelled by 146,000 in November, far better than expected, as Superstorm Sandy had no substantive effect, the Labor Department said.
But downward revisions to the prior two months totaled 49,000. The monthly average this year is 151,000, slightly worse than 2011 and barely enough to keep up with population growth.
The unemployment rate slid to a four-year low 7.7% from 7.9%, according to a separate survey of households. A broader underemployment gauge fell to 14.4%.
But those drops were mainly due to 350,000 people leaving the workforce. The labor force participation ratio fell to 63.6% from 63.8%, back near a generational low.
Unemployment would be 11.1% if the participation rate had held at the 66% level at the recession's December 2007 start.
Without fiscal policy uncertainty and Sandy, last month's job growth could've been closer to 200,000, estimated Allen Sinai, chief global economist at Decision Economics.
He still sees November's broad gains as positive. But with federal deficits and debt limiting potential growth, future hiring like ly will resemble the recent past's.
"What we've seen is what we're going to have for a long, long time," Sinai said. "We have to get used to it.
An earlier consumer sentiment spike coincided with retail payrolls rising for five straight months. The sector added 52,600 jobs last month after 50,900 in October — the best two-month performance since mid-1996. Some of November's gain may have reflected the early Thanksgiving and door-buster deals.
Payrolls were up by 23,000 in leisure and hospitality, 22,000 in health care, and 13,100 in wholesale trade. Professional services added 43,000.
Meanwhile, factory activity is weakening, and manufacturers shed workers in three of the last four months. Construction lost 20,000 in November, though steady advances in homebuilding and Sandy-related reconstruction should reverse that.
Robust hiring in consumer industries could slow as confidence retreats. The University of Michigan index tumbled to 74.5 in December from 82.7 in November, the first drop in five months, as expectations hit a year low.
Uncertainty over how lawmakers will address the fiscal cliff of automatic tax hikes and budget cuts is seen responsible for that.
"Now I think reality has set in," said Jack Kleinhenz, an economics professor at Case Western Reserve University.
Next month's report could have modest downward revisions, he added, due to the November survey being done a week earlier than usual and more precise readings on Sandy's impact.
Underlying growth trends remain moderate, Kleinhenz said. "We're not gaining any traction."