Job Growth Shatters Expectations In November As Labor Market Stays Tight

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The U.S. added 263,000 jobs in November, according to the Bureau of Labor Statistics (BLS) Friday, accelerating slightly from the 261,000 in October, as unemployment held steady at 3.7%, according to the Bureau of Labor Statistics.

The number shot past investors’ expectations, with economists polled by Dow Jones predicting that the market had added 200,000 jobs in November, according to CNBC.  A cooling labor market might convince the Federal Reserve to slow its aggressive campaign of interest rate hikes, since reduced demand for workers would help reign in historically high inflation, according to CNN. (RELATED: JPMorgan Strategists Predict Stock Plunge, Recession As Early As First Half Of 2023)

“The market is increasingly pricing in a 50-basis point hike but that might be premature – nominal incomes are still growing at a fast clip and core inflation is still quite high, although the Fed has become so unpredictable that it’s anyone’s guess,” Heritage Foundation economist E.J. Antoni told the Daily Caller News Foundation. “Don’t forget that Powell said a 75-bps hike was off the table and then delivered four of them in a row.”

Labor force participation nudged up/down to 62.1% in November from October’s 62.2%, and remains roughly 1.2 percentage points below pre-pandemic levels, according to the BLS.

Federal Reserve chair Jerome Powell said that the Fed might moderate interest rate hikes as soon as December, during at the Brookings Institute Wednesday, according to CNN.

“The Fed always walks a delicate line communicating so there’s no big surprise … they try not to take away their flexibility,” Bob Hughes, a member of the senior research faculty at the American Institute for Economic Research, told the DCNF. “[It] seems like they’ve talked up this slowing [of] rate increases pretty strongly, so I think it would be tough for them to back away from it. What this may end up doing is keeping [rates] higher for longer … if the strength in the labor market persists.”

Payroll firm ADP estimated that roughly 100,000 workers lost their jobs in the private manufacturing sector, according to a report released Wednesday. The BLS, which also measures public sector workers, estimated that the manufacturing sector added 14,000 jobs in November.   

“An employer is going to start reducing hiring long before they start letting go of their existing workforce,” Guy Berger, principal economist at LinkedIn told The Wall Street Journal in advance of the report’s release. “That’s the first lever.”

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