Hiring Booms in November
The U.S. adds 266,000 jobs and unemployment falls to 3.5 percent
The U.S. labor market shrugged off slowdown fears in November as employers added a better-than-expected 266,000 jobs. In addition to the highest employment jump since January, the unemployment rate, once again, declined to a 50-year low of 3.5 percent. Average annual wage growth ticked down slightly from 3.2 percent to 3.1 percent, but wage growth for lower-earning workers continued to show surprising strength, expanding by 3.7 percent. The overall labor force participation rate, which measures those working or looking for work, declined slightly from 63.3 percent to 63.2 percent. However, the participation rate for so-called “prime age” workers, or those aged 25–54, remained at the highest level since 2009 at 82.8 percent.
Top Takeaways from the Report
Job creation continues to propel the economy
The U.S. labor market continues to be the backbone of the economy. Employers have now added jobs for 110 consecutive months and are heading into year-end with solid momentum. Not only was November’s job gain well above economists’ estimates of roughly 180,000, but the figures for both September and October were revised upward a combined 41,000 jobs. This brings the average monthly job creation in 2019 to 180,000. While this is down from 223,000 jobs added per month during the same period in 2018, it is very solid given the ultra-low unemployment rate and heightened level of economic uncertainty. The solid pace of hiring comes at a critical time for the economy as business investment has slowed and consumers need to continue spending to keep the economy afloat.
An expansive reach
One of the hallmarks of the current economic expansion has been that previously underserved populations are experiencing solid gains. The unemployment rates for African Americans, Hispanics, and those with less than a high school education are all near all-time lows. And while average wage growth has moderated since peaking this year in February, wages for production and non-supervisory workers have continued to see big gains. Wage growth for this group of workers hit the highest level since 2009 in October at 3.8 percent, and remained very strong in November at 3.7 percent.
No Fed rate cut in December
After slashing interest rates three times in 2019, officials at the Federal Reserve signaled at their late-October meeting that they would be on pause for the foreseeable future. However, with continued weakness coming from the manufacturing sector and concerns over a potential trade deal breakdown with China, some had expected that the Fed may need to act again sooner than anticipated. This strong employment report gives officials at the Fed some breathing room and will keep them on pause at least through their December meeting.
Growth by Select Industry
Education and health services added the largest number of employees in November at 74,000. Of that gain, health care contributed the largest share of 45,200 jobs.
The manufacturing sector came back to life in November, adding 54,000 jobs. Though the majority of the gain came from the end of the General Motors strike, which added back 41,000 jobs.
Mining and logging shed 7,000 jobs and was the only sector to experience employment declines in November. The sector has lost 5,000 jobs over the past year.
The Bottom Line
November’s employment report was much stronger than many economists were anticipating. As long as the labor market can continue to perform well, the case for a 2020 recession diminishes significantly. With employers shrugging off heightened uncertainty, the Federal Reserve can continue to take a “wait and see” approach when it comes to the path of interest rates.
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