Job creation rebounded in November from a near standstill the previous month as the impact of a major labor strike and severe storms in the Southeast faded, the Bureau of Labor Statistics reported Friday.
Nonfarm payrolls rose by 227,000 this month, compared with an upwardly revised figure of 36,000 in October and the Dow Jones consensus estimate of 214,000. The number of employees in September was also revised upwards, to 255,000, 32,000 more than the previous estimate. The October figure was held back by the impact of Hurricane Milton and the US Boeing hit.
As expected, the unemployment rate rose slightly to 4.2%. The number of unemployed rose as the labor force participation rate fell and the labor force itself declined. A broader measure that includes discouraged workers and those working part-time for economic reasons rose slightly to 7.8%.
The data likely gives the Federal Reserve the green light to cut interest rates later this month.
“The economy continues to support healthy levels of job and income growth, but further increases in the unemployment rate will dull the luster of the labor market and give the Fed what it needs to cut rates in December,” said Ellen Zentner. Chief Economic Strategist at Morgan Stanley Wealth Management.
Job gains were concentrated in healthcare (54,000), leisure and hospitality (53,000) and public sector (33,000), sectors that have consistently led wage growth in recent years. Social assistance increased the total by 19,000.
At the same time, retail saw a decline of 28,000 at the start of the Christmas season. With Thanksgiving coming later than usual this year, some stores may have held off on hiring.
Workers' wages continued to rise, with average hourly wages rising 0.4% month-on-month and up 4% on a 12-month basis. Both figures were 0.1 percentage points above expectations.
Stock market futures rose slightly following the report, while Treasury yields were lower.
The report includes questions about the state of the labor market and how that will affect the Federal Reserve's interest rate decisions.
After the payrolls release, traders increased their bets on a rate cut, with market-implied odds for a quarter-point cut rising to over 88%. when central bank policymakers make their next decision on December 18.
“The data this morning was a Thanksgiving buffet with spot-on payrolls, positive revisions, but despite falling labor force participation rates, unemployment rose,” said Lindsay Rosner, head of multi-service investing at Goldman Sachs Asset Management. “This pressure does not kill the holiday spirit and the Fed remains on track to deliver a rate cut in December.”
Earlier this week, Fed Chairman Jerome Powell said the generally strong economy gave him and his colleagues the opportunity to be patient when making interest rate decisions. Other officials said they think further rate cuts are likely, but are subject to changes in economic data.
While inflation is far from its 40-year high in mid-2022, prices have been trending upward in recent months. At the same time, the October jobs report and several other reports have indicated that the job market is still growing but is slowing.
The household survey, which is used to calculate the unemployment rate, produced a different picture than the company survey, which provides the total wage figure.
According to the BLS, household employment fell by 355,000 month-over-month, while the labor force shrank by 193,000. The labor force participation rate, which measures the share of the working-age population that is either working or looking for a job, fell to 62.5%, a decline of 0.1 percentage points.
The number of full-time employees fell by 111,000, while the number of part-time employees fell by 268,000.
The unemployment rate for black workers rose 0.7 percentage points to 6.4%.
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