November Jobs Report Shows Strong Rebound, Mixed Economic Signals
Amid the turbulence resulting from the hurricane-related economic disruption in October, which caused payroll growth to plummet to an alarmingly low 12,000—the most subdued level in years—there was a palpable sense of anticipation for a vigorous recovery in November. Market participants were braced for a significant rebound, with many forecasting that payroll numbers would surpass the consensus estimate of 220,000. Their optimism was validated as the Bureau of Labor Statistics released data showing an impressive payroll increase of 227,000 in November, the second-highest surge recorded since March, bolstered further by upward adjustments to September figures.
This deviation from the pattern of downward revisions that had characterized previous months was notable. Both September and October figures were revised upwards. September's payrolls were adjusted from 223,000 to 255,000, reflecting an increase of 32,000. Similarly, October's disappointing gain of 12,000 was revised to a more reassuring 36,000, marking a 24,000-job improvement. Together, these revisions contributed an additional 56,000 jobs to the figures reported for these months, providing a clearer picture of ongoing labor market dynamics.
November's strong recovery can be largely attributed to corrections following prior disruptions such as the Boeing workers' strike and the aftermath of the hurricanes in October, both of which had distorted earlier employment data. Key industries leading the rebound included health care, social assistance, leisure and hospitality, and government employment. These sectors made significant contributions to the surge in hiring, underscoring a return to more stable trends after a period of pronounced volatility.
For those trying to decipher the implications of the report for future monetary policy decisions, particularly in relation to the Federal Reserve's stance on interest rates, the data presented a mixed narrative. On one side, the unemployment rate showed a slight uptick, moving from 4.1% to 4.2%, which was above the forecasted rate of 4.1%. Within specific demographic groups, unemployment for Black workers climbed to 6.4%, while the jobless rates for adult men, women, teenagers, Whites, Asians, and Hispanics experienced negligible or no changes. Conversely, wage growth painted a somewhat brighter picture. Average hourly earnings rose by 0.4% on a month-over-month basis, surpassing the 0.3% forecast, and annual wage growth remained steady at 4.0%, slightly exceeding the expected 3.9%. These wage trends suggest persistent upward pressure, reflecting labor market tightness.
While the Establishment Survey's headline number of 227,000 payroll gains offered a positive outlook, the Household Survey provided a more subdued perspective. It reported a decline of 355,000 employed individuals, reducing the total to 161.141 million. This contraction included reductions in both full-time and part-time employment, with full-time positions decreasing by 111,000 and part-time roles dropping by 268,000, signaling vulnerabilities that were not apparent in the headline payroll figures.
Delving deeper into the report revealed additional labor market trends worth noting. The number of long-term unemployed individuals, defined as those jobless for 27 weeks or longer, remained relatively unchanged at 1.7 million in November. This figure was higher than the 1.2 million reported a year earlier, with the long-term unemployed representing 23.2% of the total unemployed population. The labor force participation rate showed little movement, staying at 62.5%, consistent with its narrow range of 62.5% to 62.7% observed since December 2023. Similarly, the employment-population ratio held steady at 59.8%, though it has declined by 0.6 percentage points over the past year. The number of individuals working part-time for economic reasons also exhibited minimal change, standing at 4.5 million in November, an increase from 4.0 million a year prior. Among those not participating in the labor force, 5.5 million individuals expressed a desire for employment. However, these individuals were not classified as unemployed due to either not actively searching for jobs in the preceding four weeks or being unavailable to work. Within this group, 1.6 million were marginally attached to the labor force, a figure that also remained unchanged in November. Marginally attached individuals include those who had sought employment within the past 12 months but not within the previous four weeks. Discouraged workers, a subset of this group who believe no jobs are available for them, numbered 396,000 in November, showing little variation.
Sector-specific employment trends in November provided further insights into the labor market's composition and performance. The health care sector demonstrated remarkable resilience, adding 54,000 jobs. Over the past year, the sector has averaged monthly gains of 59,000 positions. In November, ambulatory health care services grew by 22,000 jobs, with home health care services driving a significant portion of this growth by adding 16,000 roles. Hospitals and nursing and residential care facilities also contributed to the expansion, gaining 19,000 and 12,000 jobs, respectively. The leisure and hospitality sector experienced robust growth, adding 53,000 jobs in November following a modest increase of 2,000 in October. Within this sector, employment in food services and drinking establishments rose by 29,000, playing a central role in the broader sector's average monthly gain of 21,000 positions over the past year.
Government employment increased by 33,000 in November, aligning closely with its 12-month average monthly gain of 41,000 positions. State government hiring accounted for 20,000 of these new roles, while federal employment saw a decline of 2,000 jobs, marking the largest drop in federal employment in two years. In the manufacturing realm, transportation equipment manufacturing saw a notable gain of 32,000 jobs, a recovery driven by the return of workers following the resolution of the Boeing strike. Meanwhile, social assistance employment rose by 19,000, consistent with its average monthly gain of 18,000 over the past year. Within this sector, individual and family services led growth, adding 17,000 positions. However, the retail trade sector encountered significant challenges, shedding 28,000 jobs in November, the largest monthly decline in a year. General merchandise retailers lost 15,000 jobs, while electronics and appliance retailers managed a modest increase of 4,000 jobs.
The broader manufacturing sector experienced mixed results. While durable goods manufacturing benefited from the resolution of the Boeing strike, adding 32,000 roles in transportation equipment, other subsectors displayed uneven performance. For example, the semiconductor and electronic component industry lost 3,500 jobs, reflecting the complexities and divergent dynamics within the manufacturing landscape.
A broader labor market trend also emerged, highlighting the notable decline in the number of unauthorized immigrant workers since reaching a peak in August. This decrease stands in contrast to the relatively stable levels of native-born workers. The reduction in unauthorized labor could exert upward pressure on wages, as employers increasingly rely on domestic labor, which typically involves higher wage negotiations compared to immigrant labor pools.
In sum, November's jobs report underscored a significant recovery in payroll growth, driven by strong performances in key sectors and corrective adjustments following earlier disruptions. However, underlying weaknesses and a mix of signals from various labor market indicators present a multifaceted picture. Policymakers and economists are left to navigate these complexities as they evaluate the overall health and trajectory of the labor market, balancing optimism with caution in the face of persistent challenges.