Nine Months of Employment: US Adds 227,000 New Jobs in November
In November, the United States experienced a rebound in job creation after being hampered by natural disasters and labor strikes, although this shift doesn't necessarily indicate that conditions in the labor market are improving, which could lead the Federal Reserve to consider another interest rate cut this month. According to the Labor Department report, non-farm payrolls increased by 227,000 jobs last month, following a rise of just 36,000 in October.
Economists surveyed by Reuters had expected the creation of 200,000 jobs in November, based on the 12,000 increase from the previous month. Projections ranged from 155,000 to 275,000 jobs. It is suggested that averaging the payroll growth from October and November could provide a clearer picture of employment trends. In October, the labor market was impacted by hurricanes Helene and Milton, as well as the strike at Boeing factories on the West Coast. It’s also believed that the October numbers were lower due to a shorter data collection period, limited to just ten days, resulting in a response rate of only 47.4%, the lowest since January 1991 and below the recent average of 69.2%. Other labor indicators, including initial unemployment claims, point to a labor market that is in good shape but slowing down. The unemployment rate rose to 4.2%, after being at 4.1% for the previous two months. Average hourly wages grew by 0.4% after experiencing the same increase in October. Over the past year, wages have increased by 4%, maintaining the same pace as in October. Financial markets are now factoring in a 72% probability of a 25 basis point cut at the Fed's upcoming monetary policy meeting on December 17 and 18. Since September, the Fed has lowered rates by 75 basis points, bringing the official rate between 4.5% and 4.75%, after raising it by 5.25 percentage points from March 2022 to July 2023.
This context underscores the importance of analysts and investors remaining alert to signals from the labor market, as any change in interest rates can affect both inflation and economic growth. An economy showing signs of slowing down could pressure the Federal Reserve to take action, which in turn will directly impact the financial decisions of businesses and consumers.
