REUTERS: US job growth surged in November after being severely hindered by hurricanes and strikes, but a rise in the unemployment rate to 4.2 per cent pointed to an easing labour market that should allow the Federal Reserve to cut interest rates again this month.
The labour market’s resilience is driving the economy through strong consumer spending, with the closely watched employment report from the Labour Department on Friday showing solid wage growth last month. The economy created 56,000 more jobs in September and October than previously estimated.
“The report should soothe bears and bulls alike,” said Scott Anderson, chief US economist at BMO Capital Markets. “The solid nonfarm payroll gain and strong earnings growth should keep the economic expansion on a sturdy foundation, even as a gradually rising unemployment rate moderates demand and inflationary pressures over time.”
Nonfarm payrolls increased by 227,000 jobs last month after rising by an upwardly revised 36,000 in October, the Labour Department’s Bureau of Labour Statistics said. Economists polled by Reuters had forecast payrolls would gain 200,000 jobs following a previously reported rise of 12,000 in October.
Job growth averaged 173,000 per month over the past three months. Economists had anticipated a payrolls boost of at least 90,000 from the end of strikes at Boeing (BA.N) and another smaller aerospace company, as well as a reversal of the disruptions wrought by Hurricanes Helene and Milton.
Capital Economics estimated the total contribution was about 70,000, leaving an underlying increase in payrolls of 157,000.
“It still implies that underlying employment growth was a touch stronger than October,” said Stephen Brown, deputy chief North America economist at Capital Economics.
“That matches the message from some of the alternative indicators suggesting that conditions in the labour market are stabilising at a healthy level.”
The acceleration in employment gains was led by healthcare, with a rise of 54,000 jobs spread across ambulatory healthcare services, hospitals, nursing, and residential care facilities.
Leisure and hospitality payrolls increased by 53,000 jobs, which were concentrated at restaurants and bars. Government employment increased by 33,000 positions, lifted by gains in state government.
Manufacturing payrolls rebounded by 22,000, with transportation equipment jobs increasing by 32,000 as the striking workers returned to the job. The rise suggests not all of the 38,000 members of the International Association of Machinists and Aerospace Workers who were on strike in October returned to work. They could be reflected in December’s data.
Social assistance payrolls increased by 19,000 jobs. Construction employment rose marginally, hinting at slow rebuilding efforts in the areas devastated by the hurricanes.
There were also gains in financial activities and professional and business services employment. Temporary help services employment rebounded slightly after dropping by 33,300 jobs in October. But the retail sector shed 28,000 jobs, mostly reflecting losses at general merchandise retailers.
A late Thanksgiving holiday also could have delayed hiring. Electronics and appliance retailers, however, added 4,000 jobs.
The share of industries reporting job growth rose to 56.2 per cent from 53.2 per cent in October.
Financial markets see a roughly 89 per cent chance of a quarter-percentage-point rate cut at the US central bank’s December 17-18 policy meeting, up from 72 per cent earlier, CME Group’s FedWatch tool showed.
The Fed has lowered interest rates by 75 basis points since September, when it launched its easing cycle. Its policy rate is now in the 4.50 per cent-4.75 per cent range, having been hiked by 5.25 percentage points between March 2022 and July 2023.
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