Hiring has rebounded, with some hazard flags
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Hiring rebounded in November as the effects of hurricanes and a strike that held down October numbers dissipated. But beneath the surface of the new numbers are some warning signs that all may not be well for American workers.
Why it matters: Robust headline job growth isn't telling the whole story, as the number of people unemployed, and the share not in the labor force at all, both increased.
- Meanwhile, wage growth actually ticked up, which could make some Federal Reserve officials wary of moving too aggressively to cut rates.
- The report should not incite meaningful worries about the labor market, wrote Seema Shah, chief global strategist at Principal Asset Management — but "there are cracks in the labor market that require Fed attention."
By the numbers: There were 227,000 jobs added in November, a gain that reflects employers adding workers back to payrolls as hurricane and strike effects subsided. September and October payrolls were revised up by a combined 56,000 positions.
- Leisure and hospitality and transportation equipment were among the sectors with strong jobs growth after flat growth and job losses last month.
- Average hourly earnings rose by 0.4% in November and have risen at a 4.5% annual rate over the last three months — rather elevated for the Fed's comfort.
Yes, but: That data is from the survey of establishments. The takeaway from households — the other survey that comprises the jobs report — is less reassuring.
- The unemployment rate, while still historically low, increased to 4.2% after moving sideways in the prior two months. Unrounded, the jobless rate came in at 4.246%, only slightly below the most recent high seen in July (4.253%).
- Roughly 193,000 workers dropped out of the labor force last month. Contrary to the hiring boom signaled by the establishment survey, this data shows there were 355,000 fewer employed workers relative to October.
Of note: The share of 25- to 54-year-old Americans who were employed fell for the second straight month. As of November, it is 80.4%, down from 80.9% in September.
- After reaching multidecade highs over the summer, it is now below its pre-pandemic levels.
Between the lines: The report still offers a green light for the Fed to cut its target interest rate at a meeting concluding Dec. 18.
- "The argument for the Fed to act preemptively to prevent further economic deceleration strengthened today," Lazard chief market strategist Ron Temple wrote Friday morning.
- But the outlook for policy in 2025 remains murky, given both uneven progress on inflation, mixed signals in the labor market, and the prospect of big policy changes in the new administration.
