The US economy witnessed a robust rebound in November, adding 227,000 jobs, surpassing economists’ expectations of 220,000. This rise signals recovery following October’s disruptions caused by severe weather and the Boeing workers’ strike, which had dampened labour market growth.
However, alongside this encouraging job growth, the unemployment rate ticked up to 4.2%, compared to October’s 4.1%. Revised data revealed October’s figures showed only 36,000 new jobs added, significantly impacted by these external factors. Furthermore, September’s job growth was revised upward, showing an additional 56,000 roles than initially reported, underscoring a stronger labour market over the autumn period.
Labour market resilience
Joe Brusuelas, RSM’s chief economist, described the current state of the labour market as “remarkably calm” and operating near full employment, with November’s figures reflecting a stabilised recovery. Despite the uptick in unemployment, the market remains resilient, with specific industries demonstrating notable gains.
Employment in the transportation equipment manufacturing sector rose by 32,000, primarily due to the return of workers previously on strike. Temporary help services also saw a modest increase, reversing the previous month’s loss of over 33,000 positions.
Wage growth and inflationary pressures
Wage growth remained a focal point for economists. Average hourly earnings rose by 0.4% in November, consistent with October’s increase and higher than the anticipated 0.3%. On an annual basis, wages climbed by 4%, outpacing the projected 3.9% rise. This steady wage growth indicates inflationary pressures persist in the economy, despite efforts to stabilise them.
The labour force participation rate, however, dipped slightly to 62.5% from 62.6% in October, reflecting a marginal decrease in the number of people actively engaged in the workforce.
Federal reserve’s next moves
November’s job report comes at a critical juncture as investors and policymakers closely watch economic indicators to gauge the Federal Reserve’s next monetary policy move. The Fed has already cut interest rates twice this year and is widely expected to announce a third reduction during its meeting on 18 December.
As of Friday morning, market probabilities suggested an 87% likelihood of a quarter-point rate cut in December, up from 66% a week prior, according to the CME FedWatch Tool. Economists argue that the latest job figures align with the Fed’s expectations and are unlikely to deter a further easing of monetary policy.
Sector-specific trends
The November report highlights sectoral shifts within the labour market. The transportation equipment manufacturing industry showed a significant recovery following the Boeing strike’s resolution, marking a vital resurgence in an area hit hardest by recent events.
Other sectors, such as temporary employment services, demonstrated resilience, albeit modestly. Analysts note these trends suggest a recovery process that is steady but not without its challenges.
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Economic outlook
November’s data paints a picture of a labour market regaining momentum but still grappling with pockets of volatility. The rise in unemployment, although slight, serves as a reminder of broader economic challenges, including inflationary pressures and workforce participation concerns.
Despite these headwinds, the job market remains a cornerstone of economic stability. Wage growth and employment gains across key industries signal continued resilience. As the Federal Reserve deliberates its next steps, November’s report underscores the economy’s nuanced recovery, balancing robust job creation with inflation management.
Investor sentiment
For investors, the labour market’s rebound offers a mixed bag. While job growth and wage increases support consumer spending, rising unemployment and lingering inflation may temper optimism. The Federal Reserve’s decision later this month will likely hinge on this delicate balance, shaping the economic trajectory as the year concludes.
In sum, November’s job report reflects a US economy navigating recovery with cautious optimism, buoyed by strong job creation but tempered by rising unemployment and persistent inflationary pressures. As policymakers and investors weigh their next moves, the labour market’s trajectory will remain under close scrutiny.
