Economics

November Jobs Report: A Strong Dose of Clarity

The U.S. added 228,000 jobs, down from a revised 244,000 jobs added in October.

Zions Bank Dec 8, 2017

After two months of hurricane-impacted employment reports, November’s jobs release provided a clearer picture of the U.S. labor market. The U.S. added 228,000 jobs, down from a revised 244,000 jobs added in October, but stronger than consensus estimates of 190,000. The unemployment rate remained level at 4.1 percent, and the labor force participation rate stayed at 62.7 percent. While wage growth came in at a tepid 2.5 percent, the overall strength of November’s report should provide the Federal Reserve with the go-ahead to raise interest rates again in December.

Top Takeaways from the Report

The labor market is strong: Employers continued to hire in November, adding 228,000 jobs. This is a strong signal that the U.S. labor market is on the right track and that the storm and fire impacts seen in the fall are mostly in the rearview mirror. September’s employment gain was revised up from 18,000 to 38,000, and October’s was revised down from 261,000 to 244,000.  

Unemployment and underemployment remain low: After dipping to a 17-year low in October, the unemployment rate in November remained steady at 4.1 percent. The broader measure of underemployment rose slightly from 7.9 percent to 8.0 percent. Both of these unemployment measures continue to show an economy at or near full-employment and indicate that most people looking for work can find it.

Labor Force Participation continues sideways: After declining from 63.1 percent in September to 62.7 percent in October, the labor force participation rate remained flat in November. The rate, which measures the number of individuals working or looking for work, has been on a long-term downward trend and has struggled to find its footing in 2017. As more baby boomers head for retirement, it will be important for the labor market to find new sources of labor in order to continue the economic expansion.

More mediocre wage growth: Despite continued strength in the labor market, wage growth refuses to pick-up in a meaningful way. The question of 2017 has been not if, but when wages will start to rise, but we will have to wait until 2018 to find out. As the pace of hiring remains brisk and the unemployment rate low, businesses will be forced to compete for qualified labor and raise wages.

Growth by Industry

Education and health services added the largest number of jobs in November of 54,000. The majority of these gains were seen in the health care and social assistance sector, which added 40,500.

The professional and business services industry continued to see strong growth and added 46,000 jobs. The sector has added roughly 550,000 jobs since November of last year.

Manufacturing added 31,000 jobs and marked the 13th-straight month of employment gains. Over the last year, the sector has added 189,000 jobs. This is a positive sign that the sector is seeing a turnaround.

After adding more than 100,000 jobs in October, the leisure and hospitality industry, which was significantly impacted by Hurricanes Harvey and Irma, added 14,000 jobs in November. It will likely take several months for the full hurricane-related impact on this industry to be realized.

The Bottom Line – The U.S. labor market is in great shape heading into the last month of 2017. After adding 228,000 jobs in November, the U.S. keeps the longest-running employment growth streak alive at 86 months. This coupled with unemployment at 17-year lows, indicates the labor market is marching ahead at full-seed. With the recent pick-up of economic growth and solid November employment report, the Federal Reserve will likely go ahead with another interest rate hike in December. 

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The division of Economics and Public Policy at Zions Bank informs and educates employees, clients, and the community-at-large by providing insight and analysis on issues related to local, national and global economic trends as well as federal banking policies. The primary goal of the Economic and Public Policy team is to help individuals and businesses understand important issues that can impact their daily financial decisions. For more information and analysis, please visit www.zionsbank.com/economy.

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