US employers added 263,000 jobs in November as hiring remained strong despite rising interest rates, high inflation and growing recession fears.
The jobless rate held steady at 3.7%, the Labor Department said Friday.
Economists polled by Bloomberg estimated that 200,000 jobs were added last month.
Payroll gains were revised down from 46,000 to 269,000 for September but up from 23,000 to 284,000 for October, cutting advances for the two months by an insignificant 23,000 and leaving the picture intact. a gradually slowing but remarkably resilient labor market.
The report is unlikely to be welcomed by a Federal Reserve seeking to increase the supply of available workers and slow job and wage growth to cool inflation which, at 7.7%, is slightly lower. at a 40-year high. And that could mean continued aggressive interest rate hikes aimed at tempering price increases, a development that would likely hurt equity markets that have rallied in hopes of slowing rate hikes.
“Ironically, by pushing the (Fed) to raise rates further, continued strong job growth makes a near-term recession more likely,” said Gus Faucher, chief economist at PNC Financial Services Group.
Capital Economics and Nationwide, among other research firms, still expect the Fed to return to a half-point rate hike this month after four consecutive three-quarter point hikes.
In November, the share of adults working or looking for work fell slightly to 62.1%, leaving it well below the pre-pandemic level of 63.4%. The labor force participation rate has generally increased since 2020 as workers return to a hot labor market after caring for children or remaining inactive due to COVID-19 fears.
But that share has remained roughly flat this year, underscoring that most Americans eager to return to the workforce have done so, especially baby boomers who retired early during the pandemic. That could keep wage increases high as employers compete for a smaller pool of workers, forcing companies to raise prices further to maintain profits.
Last month, the average hourly wage rose 18 cents to $32.82, bringing the annual increase to 5.1% from 4.7% the previous month. Wage increases had moderated and many economists expected a further cut in November.
Stock market, 10-year notes today
Shares opened lower after the report was released. The Dow Jones Industrial Average fell 0.9%. The Nasdaq Composite and S&P 500 were both down more than 1% as of 9:44 a.m. EST. Yields on 10-year US Treasuries hit 3.57% on Friday morning.
Leisure and hospitality, the industry hardest hit by the pandemic, led the job gains with 88,000, mostly in restaurants and bars. Employment in the sector is still nearly a million below its pre-COVID level, although the payroll in the United States has broadly recovered the 22 million jobs lost during the crisis in August.
Health care created 45,000 jobs; building site, 20,000; manufacturing, 14,000; and transportation and warehousing, 15,000.
Retailers lost 30,000 jobs after seasonal adjustments because the industry added far fewer holiday workers than it historically had.
Despite its resilience, the labor market has gradually cooled this year. Job growth has moderated from a pace of around 450,000 for most of 2022 to less than 300,000 in recent months. High inflation and sharp Fed rate hikes have hampered rate-sensitive sectors like housing and technology.
Amazon and DoorDash layoffs on the rise
Tech giants Meta, Twitter, Amazon, DoorDash and Lyft, among many others, announced a total of more than 142,000 layoffs this year.
Overall, initial jobless claims, a reliable indicator of job cuts, rose slightly in November but remain historically low, averaging 221,000 per week, according to Goldman Sachs. Pandemic-induced labor shortages have made companies reluctant to lay off workers, fearing they won’t be able to replace them when the economy rebounds.
Recession of 2023?
Yet a labor market that was exploding earlier this year is losing momentum. Most economists are predicting a recession next year as the Fed continues to hike rates, causing some companies to leave vacancies as employees leave and freeze hiring. There were 10.3 million job openings in October, down from 10.7 million the previous month.
Job gains are also slowing because the country in August completed its recovery of the 22 million jobs lost at the start of the pandemic, says Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Some industries are still catching up. Leisure and hospitality – which includes restaurants, bars and hotels – remain at 980,000 jobs below their pre-COVID level and could continue to add workers at a solid pace as more and more Americans are going back to restaurants and traveling, says Julia Pollak, ZipRecruiter’s chief economist.
In total, Moody’s Analytics expects average monthly job growth of around 76,000 in 2023, which would be the weakest performance in recent memory outside of the 2007-09 and 2020 recessions.
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