Job creation in November rebounded from a near standstill the previous month when the impact of a significant labor strike and violent storms in the South East subsided, the Bureau of Labor Statistics reported on Friday.
Nonfarm payrolls increased 227,000 for the month, compared with an upwardly revised 36,000 in October and the Dow Jones consensus estimate for 214,000. The September payrolls count was also revised upwards, to 255,000, up 32,000 from the previous estimate. October numbers were held back by effects from Hurricane Milton and the Boeing hit
The unemployment rate rose higher to 4.2%, as expected. The unemployment figure rose as the labor force participation rate decreased and the workforce itself decreased. A broader measure that includes discouraged workers and those holding part-time jobs for economic reasons moved slightly higher to 7.8%.
The data is likely to give the Federal Reserve the green light to lower interest rates later this month.
“The economy continues to produce a healthy amount of employment and income, but another rise in the unemployment rate is dampening some of the shine in the labor market and giving to 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 health care (54,000), recreation and hospitality (53,000), and government (33,000), sectors that have consistently led payroll growth for the past few years. Social assistance added 19,000 to the total.
Meanwhile, retail trade saw a decline of 28,000 heading into the holiday season. With Thanksgiving coming later than usual this year, some stores may have stopped hiring.
Workers' wages continued to rise, with average hourly earnings up 0.4% from a month ago and 4% on a 12-month basis. Both numbers were 0.1 percentage points above expectations.
Stock market futures were higher after the report while Treasury yields were lower.
The report comes with questions about the state of the labor market and how that will affect the decisions of the Federal Reserve regarding interest rates.
Traders quickened their bets on a rate cut after the payment release, with market odds rising above 88% for a quarter-percentage-point cut. when central bank policymakers make their next decision on December 18.
“Data was a Thanksgiving buffet this morning with payrolls showing up, positive revisions, but unemployment heading higher despite falling participation rate ,” said Lindsay Rosner, head of multi-service investing at Goldman Sachs Asset Management. “This print won't kill the holiday spirit and the Fed remains on track to deliver a cut in December.”
Earlier this week, Fed Chairman Jerome Powell said that the generally strong state of the economy allows him and his colleagues to be patient when making interest rate decisions. . Other officials have said they see further interest rate cuts as likely but subject to changes in economic data.
While inflation is far from boiling over from its 40-year high in mid-2022, the past few months have shown prices rising. At the same time, the October jobs report and several other reports have pointed to a job market that is still growing but slowing.
The survey of households, which is used to calculate the unemployment rate, painted a different picture as the institutional survey which provides the main payroll accounts.
According to the BLS, household employment fell by 355,000 in the month even as the workforce contracted by 193,000. The labor force participation rate, which measures the proportion of the working-age population either at work or looking for work, fell to 62.5%, a decrease of 0.1 percentage point.
Full-time workers decreased by 111,000 while part-time workers were off by 268,000.
The unemployment rate for Black workers jumped to 6.4%, an increase of 0.7 percentage points.
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