At a glance:
- The U.S. economy added 227,000 jobs in November, surpassing expectations of 220,000.
- The unemployment rate increased slightly to 4.2% as labor force participation declined.
- Wage growth remained strong at 0.4% for the month and 4% year-over-year, signaling steady income gains.
The U.S. labor market rebounded in November, adding 227,000 jobs as the impact of October’s disruptions from hurricanes and labor strikes eased. Data from the Bureau of Labor Statistics (BLS) showed stronger-than-expected job creation, coupled with a slight uptick in the unemployment rate to 4.2%.
November’s figures exceeded economists’ forecast of 220,000 jobs and marked a recovery from October’s upwardly revised 36,000 jobs, previously hindered by strikes at Boeing and severe weather. September’s job growth was also revised upward by 32,000 to 255,000.
Sector-Specific Gains and Losses
Several key sectors contributed to November’s job growth. Health care led with 54,000 new positions, continuing its trend as a top driver of employment. Leisure and hospitality followed closely, adding 53,000 jobs, with food services and drinking places accounting for more than half of the gains.
Government employment rose by 33,000, primarily at the state level. Transportation equipment manufacturing rebounded strongly, gaining 32,000 jobs as workers returned after a Boeing strike. Social assistance added 19,000 positions, while construction and financial activities saw modest gains.
However, the retail sector shed 28,000 jobs, driven by declines in general merchandise stores, even as electronics and appliance retailers added 3,600 positions. The retail downturn comes during a holiday season when hiring often surges, signalling potential caution among employers.
Some people also say that Trump’s inevitable return to office may have encouraged businesses to start growing again, too…
Wages and Labor Force Participation
Wage growth remained robust, with average hourly earnings rising 0.4% in November, exceeding the 0.3% forecast. Over the past year, wages increased by 4%, reflecting continued income growth for workers.
The labor force participation rate, however, dipped slightly to 62.5% from 62.6% in October, continuing a year-long trend of little fluctuation. The number of long-term unemployed, defined as those jobless for 27 weeks or more, remained largely unchanged at 1.7 million, comprising 23.2% of the unemployed.
Federal Reserve Implications
November’s report arrives as the Federal Reserve prepares to meet in mid-December to discuss monetary policy. The strong job growth and steady wage increases are likely to reinforce expectations of a quarter-point rate cut, which markets currently predict with an 87% probability.
“The economy continues to produce a healthy amount of job and income gains, but a further increase in the unemployment rate tempers some of the shine in the labor market and gives the Fed what it needs to cut rates in December,” said Ellen Zentner, Chief Economic Strategist at Morgan Stanley Wealth Management.
A Mixed Labor Market Outlook
While the overall picture shows resilience in job creation, the report highlighted discrepancies in labor market participation. Household employment, which calculates the unemployment rate, declined by 355,000 in November, while the broader labor force contracted by 193,000.
The unemployment rate for Black workers rose significantly, jumping to 6.4% from 5.7% in October. Full-time employment fell by 111,000, and part-time positions dropped by 268,000, underscoring challenges in securing stable employment.
Despite these mixed signals, the November data reflects a labor market that remains robust as it weathers external disruptions. The Federal Reserve will likely see this report as support for its cautious approach to monetary easing while monitoring inflation and employment trends.