US economy added more jobs than anticipated in November
The US’s unemployment rate posted an unexpected drop in November, with the economy adding 199,000 jobs in a sign of a resilient labor market.
The Bureau of Labor Statistics said on Friday that unemployment ticked downwards last month, falling to 3.7% from 3.9% as the pace of job growth also accelerated.
November’s jobs and unemployment figures surged past economists’ expectations, with analysts having predicted an unchanged jobless rate and employment gains of 185,000.
The jobs figures were bolstered by the return of striking auto and film industry workers, and indicated that the economy continues to operate at a brisk clip despite Federal Reserve interest rate hikes.
Health care saw a strong jobs uptick in November, adding 77,000, while government (49,000), manufacturing (28,000), and leisure and hospitality (40,000) also posted big gains. Average hourly earnings were up by 0.4% compared with the previous month, and increased by 4% on a year-over-year basis.
Mortgage Bankers Association (MBA) senior vice president and chief economist Mike Fratantoni said that despite the higher-than-expected jobs figures, growth was concentrated in just a few sectors, “while employment is little changed or declining in other sectors.”
He said the yearly pace of wage growth was “likely too rapid” to be consistent with the Fed’s 2% inflation target, and an indicator of a robust labor market.
“These trends... paint a picture of a job market that is still strong, even though the number of job openings has declined, and at least some sectors are seeing an increase in layoffs,” Fratantoni said in a note after the release.
How will the Federal Reserve react to the news?
Construction employment remained largely flat for the month – but Fratantoni said with homebuilders expected to remain the key source of housing supply in 2024, “we might see further employment growth in the sector, even if the economy slows as we anticipate.”
Attention will now turn to whether the jobs figures were strong enough to compel the Fed to hike interest rates in its next announcement, with the central bank currently on pause.
Mortgage rates jumped following the report, Fratantoni noted, with the jobs market probably still strong enough to keep the Fed “cautious” when it comes to mapping out a clear path on rates at its next meeting.
“Inflation is declining, but further declines are likely dependent upon some slowing in the job market,” he said. “We continue to forecast that the Fed will begin to cut rates in the spring of 2024, as job market trends are likely to weaken from here.”