And they bury the rest of the good news in the last 2 paragraphs.
- 4% Wage Growth
- Unemployment down to 3.7%
- Inflation is less than Wage Growth
- Bankers feel encouraged
Fuckin' Press Poodles
The unemployment rate dipped to 3.7 percent, reflecting a labor market that remains favorable to workers
The U.S. economy created 199,000 jobs in November and the unemployment rate fell to 3.7 percent, according to data released Friday by the Bureau of Labor Statistics, reflecting the continued slowdown in labor market.
The labor market has tightened through the end of the year with just a handful of industries, health care especially, fueling job growth, keeping the economy out of a recession that economists had widely feared just a year ago.
“The current state of the labor market is a good one,” said Nick Bunker, economic research director at the jobs site Indeed. “For the last year plus, we’ve been talking about a normalizing labor market. We’re at the spot where that process is complete. This is a normal labor market. Things have calmed down in a painless way.”
Health care and government created the most jobs, as consumers have continued to shift spending toward services and an aging population has intensified that demand. Health care added 77,000 jobs in November, mainly in ambulatory health-care services, hospitals and nursing-care facilities. The government sector added 49,000 jobs in November, finally catching its pre-pandemic employment levels, as wages in state and local government have caught up with the private sector.
Manufacturing also trended up by 28,000, reflecting the return of union auto-manufacturing workers from their strike. Leisure and hospitality added nearly 40,000 jobs, mostly at restaurants and bars, after months of choppy growth.
Other industries showed negative or sluggish growth. Retail lost 38,000 jobs, while transportation and warehousing, construction, financial services and the information sector, which includes tech, showed little change.
Some of the slowdown is a reaction to the Federal Reserve’s interest rate hikes. The central bank, which has lifted interest rates to the highest level in 22 years to bring down inflation, so far has achieved its goal of easing demand in the labor market and wage growth enough to bring down inflation, to 3.2 percent over the year in October, without triggering catastrophic job losses so far. Economists caution that it remains too early to see the full impact of the rate hikes.
Investors are optimistic that the softening in the labor market will spur the Fed to cut rates early next year, which has spurred enthusiasm in the financial markets. Friday’s jobs report provides one of the last snapshots of the labor market before the Fed meets Tuesday and Wednesday to consider policy on interest rates, which are designed to curb inflation.
By most measures, the labor market remains just as strong or stronger than the years leading up to the pandemic, a period marked by low unemployment and hardy job growth. The percentage of Americans who are unemployed has been below 4 percent for two years, a sign that the labor market remains unusually favorable for workers, giving them leverage to demand raises and switch into better jobs. Layoffs also remained low in October, according to the Labor Department’s job openings survey released Tuesday, despite some concentrated pockets of job losses in finance, tech and media.
Meanwhile, job openings have dropped substantially from their peak at 12 million in March 2022 down to 8.7 million jobs in October, according to the Tuesday report, in a sign that employers are no longer on a hiring frenzy. The low layoff rates and reduction in hours worked since earlier this year are signs that employers are acting cautiously, holding on to workers despite tempered demand, after years of competing for labor.
“Employers aren’t willing to close their eyes and pay for labor anymore,” said Drew Matus, chief market strategist at MetLife Investment Management. “But they’re paying attention to who and what they need. And they’re thinking, what if everything gets so much better and I’m understaffed? Some of that is a hangover from the covid experience.”
In welcome news for the Fed, wage growth moderated in November, rising by 4 percent over the previous 12 months in November, to $34.10 an hour. The good news for workers is that even as wage growth has moderated since earlier this year, inflation has slowed more, meaning average hourly earnings are beating price increases, boosting Americans’ spending power.
“This is encouraging for central bankers and the people getting real wage gains,” Bunker said. “It’s helping people spend more which is good for GDP growth and for everyone. It’s a win-win for a variety of audiences.”
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