November Job Growth Beats Expectations

U.S. Economy Added 263,000 Jobs in November, Topping 200,000 Estimate

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The U.S. economy added 263,000 jobs in November, exceeding forecasts for a 200,000 gain, while wages rose by the most since January, suggesting the Federal Reserve’s campaign to cool growth by raising interest rates still has room to run. The unemployment rate stayed at 3.7%, the Bureau of Labor Statistics (BLS) said in its latest nonfarm payrolls report Friday.

Key Takeaways

  • The U.S. economy added 263,000 jobs in November, exceeding projections for a gain of 200,000 and suggesting the labor market remains tight
  • By sector, job gains were strongest in leisure and hospitality, health care, and government. Declines were recorded in retail trade and transportation and warehousing
  • The unemployment rate remained unchanged at 3.7%, below projections of 3.8%
  • The labor force participation rate ticked down to 62.1%, with the employment-to-population ratio just below 60%
  • Wage growth accelerated, with average hourly earnings up 0.6% from October and recording the highest monthly gain since January
  • Another stronger-than-expected jobs report could force the Fed to adopt a more aggressive policy stance to cool the labor market and inflation

Job Gains by Sector

Stocks fell and bond yields rose after the stronger-than-expected jobs report. The leisure and hospitality sector added the most jobs, rising by 88,000 positions, led by a 62,000 gain in food services and drinking places. Still, total employment remained at 980,000 positions, or 5.8%, below its pre-pandemic peak.

Health care jobs rose by 45,000, led by gains in ambulatory care services, hospitals, and nursing and residential care facilities. Employment in government positions rose by 42,000, including a gain of 32,000 in local government. Other sectors recording gains included social assistance (+23,000), construction (+20,000), information (+19,000), manufacturing (+14,000), financial activities (+14,000), and professional and business services (+6,000).

On the down side, retail trade shed a net 30,000 positions, including a 32,000 decline in employment at general merchandise stores. Losses were partially offset by higher employment at motor vehicle parts dealers, which gained 10,000 positions. Transportation and warehousing lost 15,000 positions.

Unemployment Rate Unchanged

The U.S. unemployment rate remained unchanged at 3.7% in November, below projections of a slight increase to 3.8%. The number of unemployed remained effectively unchanged at 6 million. The labor force participation rate edged down marginally to 62.1%, from 62.2% in October, with the employment-to-population ratio at 59.9%. Both measures remain 1.3 percentage points below their pre-pandemic levels, likely accounting for permanent job losses during the pandemic.

Wage Gains Accelerate

Average hourly earnings for private-sector workers rose 0.6% in November, to $32.82, accelerating from a 0.5% gain in October and recording the highest monthly wage growth since January. On an annual basis, nominal wages rose 5.1% from the same period in 2021. The gains still lagged behind inflation, which is running at an annual rate of 7.7%, resulting in a further loss of consumer purchasing power.

Implications for Fed Policy

Strength in the job market could force the Fed to adopt a more aggressive monetary policy stance, particularly as inflation remains far above the central bank’s target range of 2%.

Article Sources
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  1. Bureau of Labor Statistics (BLS). “Employment Situation Summary: November 2022

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