Job creation showed little sign of slowing in November, as payrolls grew faster than expected and the unemployment rate fell despite signs of an economic slowdown.
Nonfarm payrolls rose by a seasonally adjusted 199,000 jobs in the month, slightly above the Dow Jones forecast for a 190,000-job gain and above the unrevised 150,000 increase in October, the Labor Department said Friday. Announced.
The unemployment rate fell to 3.7%, compared to the expected 3.9%, as the labor force participation rate rose slightly to 62.8%. The more comprehensive unemployment rate, which includes discouraged workers and those taking part-time jobs for economic reasons, fell by 0.2 points to his 7%.
The ministry’s household survey, used to calculate the unemployment rate, showed further solid employment growth of 747,000 people, with the labor force increasing by 532,000 people.
Average hourly wages, a key inflation measure, rose 0.4% in the month and 4% from a year earlier. Last month’s rate of increase was slightly higher than expected at 0.3%, but the annual rate was about the same.
Markets reacted mixedly to the report, with stock market futures slightly negative, while Treasury yields soared.
“What we were hoping for was a strong but moderate labor market, and that’s what we saw in the November report,” said Robert Frick, business economist at Navy Federal Credit Union. It’s all about healthy job growth, low unemployment and decent wage increases.”This indicates that the labor market has reached a natural equilibrium with approximately 150,000 jobs. [per month] That’s enough to keep the economy expanding next year, but not enough to cause the Fed to raise rates.
Healthcare was the largest growth industry, adding 77,000 jobs. Other significant increases include government (49,000 jobs), manufacturing (28,000 jobs), and leisure and hospitality (40,000 jobs).
The retail industry lost 38,000 jobs in the lead-up to the holiday season, half of which were at department stores. Transportation and warehousing jobs also decreased by 5,000 jobs.
The length of unemployment has significantly shortened to an average of 19.4 weeks, the lowest level since February.
The report comes at a critical time for the U.S. economy.
Although this year’s growth defies most expectations of a recession, most economists expect a sharp slowdown in the fourth quarter, followed by more moderate growth in 2024.
Federal Reserve officials are keeping a close eye on employment data as they continue efforts to bring down inflation, which has been at a 40-year high but is showing signs of easing.
Futures market price quotes strongly suggest the Fed will end its rate hike campaign and begin cutting rates next year, but central bankers are becoming more cautious about future developments. Pricing had suggested the first rate cut would come in March, but it has changed following the jobs report, making it now more likely that the expected first rate cut will be in May.
The Federal Reserve is scheduled to hold its last two-day policy meeting of the year next week, and investors will be looking for clues about how officials view the economy.
Policymakers are aiming for a soft landing for the economy, with moderate growth, a sustainable pace of wage growth and inflation likely to recede to at least the Fed’s 2% target.
Consumers are key to the U.S. economy, and by most measures, they’re holding up pretty well.
Retail sales fell 0.1% in October, but were still up 2.5% from a year earlier. This number is not adjusted for inflation, so it shows consumers are at least roughly keeping up with price increases. Inflation, which excludes food and energy prices, was at an annual rate of 3.5% in October, according to a measure used by the Fed.
But there are also concerns that continued pressure from the end of coronavirus-era stimulus and rising interest rates will weigh on spending.
Household net worth fell by about $1.3 trillion in the third quarter to about $151 trillion, according to Federal Reserve data released this week. This is mainly due to the decline in the stock market. Household debt rose 2.5%, close to the pace of the past few quarters.
Fed officials are closely monitoring wage statistics. Rising prices tend to trickle down to wages, which can create a spiral that is difficult to control.
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