Nonfarm Payrolls Beat Forecast at 227K, Unemployment Rate Hits 4.2%
1min read The US added 227,000 non-farm payroll jobs in November, exceeding forecasts of 218,000. The unemployment rate ticked up to 4.2%, higher than the expected 4.1%.
Wage growth shows accelerated, with average hourly earnings climbing 0.4% month-over-month and 4.0% year-over-year, surpassing market expectations.
Following the report, major US stock futures spiked, the dollar index dropped by 0.2%, and the probability of a 25-basis-point Federal Reserve rate cut in December rose to 87%(67% before data released), according to CME FedWatch data.
Sector Highlights
Job gains were led by healthcare, social assistance, leisure, hospitality, and government sectors. Durable goods manufacturing saw a 26,000-job boost as the Boeing strike ended. On the other hand, retail trade posted its largest annual job cuts.
Shifts in Unemployment
The labor force participation rate fell slightly to 62.5%. The rise in unemployment was driven primarily by permanent job losses rather than temporary layoffs. Additionally, more individuals voluntarily left their jobs or entered the labor force but struggled to find immediate employment. Long-term unemployment—those out of work for at least 27 weeks—rose to its highest level in nearly three years, indicating that job seekers are taking longer to secure employment.
Analysts' Perspectives
Economists and market analysts largely view the data as reinforcing the FED's narrative of a gradually cooling labor market.
Bloomberg: Adjusting for disruptions from hurricanes and the Boeing strike, the report aligns with the Fed's view that the labor market remains stable, though no longer a significant driver of inflation.
WSJ: The November numbers provide clarity after October's weak showing, which was affected by temporary distortions. While the labor market has slowed, it remains resilient, allowing the Fed flexibility in its upcoming decisions.
Charles Schwab: The data showcases a healthy economic balance of growth, employment, and wage stability, with little sign of pressing issues. This could push the Fed toward a hold stance at its next meeting, particularly with political uncertainties looming.
Conclusion
The November jobs report reflects a labor market that, while solid, is starting to show signs of softening. Rising unemployment and slowing participation rates signal potential challenges ahead.
However, steady wage growth and resilient job gains provide a counterbalance, supporting the Fed's cautious easing of monetary policy. The next steps will hinge on upcoming inflation data and broader economic developments, including potential shifts in fiscal policy under a new administration.
Will the Fed hold or cut rates further? All eyes are now on the November inflation report.