U.S. Payrolls Add 64,000 Jobs in November After October Decline, BLS Reports

Nonfarm payrolls grew by 64,000 in November, the Bureau of Labor Statistics (BLS) reported Tuesday in figures postponed by the recent federal government shutdown. The modest increase outpaced the Dow Jones consensus forecast of 45,000 and contrasted with a revised fall of 105,000 jobs in October, when deferred government layoffs weighed heavily on overall employment.

Unemployment Edges Higher

The unemployment rate rose 0.1 percentage point to 4.6%, the highest level since September 2021 and above market expectations. A broader measure that includes discouraged workers and those working part-time for economic reasons climbed to 8.7%, its peak since August 2021.

According to the BLS, recent data will remain subject to volatility because the shutdown disrupted the household survey used to calculate unemployment. October’s reporting issues led officials to postpone both the monthly employment release and the consumer price index at that time.

Government Layoffs Drive October Slump

October’s sharp drop in payrolls largely reflected a reduction of 162,000 positions in federal, state and local government. That category shed another 6,000 jobs in November. The October contraction marked the third month in the past six that registered a net job loss. Revisions also showed August payrolls declining by 26,000—22,000 more than previously reported—while September’s gain was trimmed by 11,000.

Sector Performance in November

Hiring in November remained concentrated in a few industries:

• Health care: +46,000 jobs, representing more than 70% of total net growth.
• Construction: +28,000 jobs.
• Social assistance: +18,000 jobs.

Other major sectors posted declines. Transportation and warehousing lost 18,000 positions, extending a multi-month contraction, while leisure and hospitality payrolls fell by 12,000.

Labor market observers note that overall hiring and separations remain subdued. Analysts also point to tighter immigration policies introduced during President Donald Trump’s administration, which have reduced the usual flow of foreign workers and constrained labor supply.

Wage Growth Cools

Average hourly earnings rose 0.1% in November, below the 0.3% estimate, and were up 3.5% year over year—the smallest annual increase since May 2021. The muted wage reading supports Federal Reserve officials’ view that the labor market is not a primary source of inflationary pressure.

Labor Force Dynamics

Over the combined October–November period, household employment increased by 407,000. At the same time, the labor force expanded by 323,000, pushing the participation rate up slightly to 62.5%. The growth in the labor force accounted for most of the uptick in the headline unemployment rate.

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Federal Reserve Policy Context

The central bank is navigating a delicate balance between preventing further labor-market weakness and containing inflation. At its most recent meeting, the Federal Reserve cut its benchmark federal-funds rate by 0.25 percentage point—its third consecutive reduction since September—bringing the target range to 3.5%–3.75%. Policymakers signaled that additional easing would require clearer evidence of economic softening.

Market participants assign roughly a 24% probability to another cut at the late-January meeting, according to CME Group’s FedWatch tool. Many analysts expect the Fed to place greater weight on December labor data, scheduled for release in early January, when determining near-term policy. For background on how the Federal Open Market Committee sets interest rates, see the Federal Reserve’s overview of monetary policy operations.

Retail Sales Data

Separately on Tuesday, the Commerce Department reported that seasonally adjusted retail sales were flat in September, missing the forecast for a 0.1% increase. Excluding automobiles, sales advanced 0.4%, beating expectations of 0.2% growth.

Economists at several firms, including Navy Federal Credit Union, describe the recent stretch as a “jobs recession,” noting that the U.S. economy has added just 100,000 positions over the past six months, with health care accounting for most of that gain.

Looking ahead, upcoming data releases—including December’s employment report and inflation readings—are expected to guide both market sentiment and Federal Reserve decision-making as 2024 policy discussions begin.

Crédito da imagem: Reuters