The US economy bounces back pretty strong in the November round of job creation as nonfarm payrolls grow 227,000, much higher than Dow Jones estimates of 214,000. Employment had jumped upwardly revised to 36,000 in October which was negatively impacted by a labor strike and heavy storms. In September payroll count, also saw a revised higher mark at 255,000 an addition of 32,000 to its earlier estimated number. These figures still show that the labor market remains resilient despite challenges during the prior months.
The unemployment rate was a bit higher at 4.2%, as predicted, as the labor force participation rate moderated by a little and the size of the labor force declined. A broader measure of unemployment that counted discouraged workers and those who work only part-time for economic reasons increased to 7.8%. This uptick in unemployment rates along with stable job and wage growth, leaves the Federal Reserve room to think about interest rate cuts later in the month.
Job growth was strongly concentrated in sectors such as health care, which increased 54,000 jobs; leisure and hospitality, by 53,000; and government, adding 33,000 positions. Social assistance also rose by 19,000. But retail trade jobs declined by 28,000 jobs. The decline may be associated with the timing of Thanksgiving, which may have had a spillover effect on seasonal hiring. Average hourly earnings rose 0.4% from October and were up 4% from the same month last year, both stronger than forecast. These wage gains continue to suggest a tight labor market.
Payroll data has been fueling expectations that the Federal Reserve will act to lower interest rates in December. Traders boosted their bets on a rate cut, with market-implied odds of a quarter-point reduction topping 88%. This was fueled by comments from Federal Reserve officials, including Chair Jerome Powell, who highlighted the overall strength of the economy but noted the potential for future rate cuts if economic conditions demand them.
While strong job creation was reported, other data diverged slightly: full-time employment fell and part-time work increased. Meanwhile, unemployment rose to 6.4% for Black workers from a year ago, by 0.7 percentage point. Mixed signals point again to ongoing labor-market troubles that could have implications for Federal Reserve policy going forward.
