Job Market Surges Back In November, Putting The Fed On Track For Another Rate Cut
The U.S. job market bounced back in November after hurricanes and a labor strike froze growth in October.
Nonfarm payrolls increased by 227,000 jobs for the month, beating analysts' consensus estimates by 13,000 new positions. Despite job growth, unemployment ticked up to 4.2%.
The report comes just ahead of the Federal Reserve’s next decision on a potential cut to its benchmark rate, set for Dec. 18.
While the numbers signal the economy is in a strong position, analysts said Friday’s report was roughly in line with expectations and was unlikely to derail the Fed’s loosening of monetary policy that began in September.
“This has no immediate impact on at least December's meeting,” Matt Colyar, an economist at Moody’s Analytics, told Bisnow Friday morning. “The Fed's got it in their mind, and of course, things can change, but this isn't too much of a deviation in a way that would change the Fed's thinking from cutting in December.”
The data, released Friday by the Bureau of Labor Statistics, also revised October’s jobs numbers up from 12,000 new jobs to 36,000 and September’s from 32,000 jobs to 255,000.
Wage growth came in slightly above expectations, with average hourly earnings up 0.4% from last month and 4% in the last 12 months.
Despite the positive numbers, the report immediately boosted Wall Street’s expectations of a December cut. CME Group’s Fed Watch gauge estimates that 87% of traders expect a cut at the next Fed meeting, up from 71% Thursday.
“The monetary policy implications for November’s report are relatively modest,” Dante DeAntonio, senior director at Moody’s Analytics, said in a statement. “It was already widely expected that the Federal Open Market Committee would move forward with another 25-basis point rate cut in December, and the latest employment report is unlikely to change that.”
The unemployment rate, arguably the best summary statistic in the monthly jobs report, ticked up to 4.2% in November.
— Nick Timiraos (@NickTimiraos) December 6, 2024
Unrounded, it was 4.246%, leaving it very close to the recent high of 4.253% recorded in July.
Job growth in the establishment survey has been fine. But the… pic.twitter.com/NFsFRngTVJ
Job growth was concentrated in the same sectors that have powered the market throughout the year. Healthcare added 54,000 roles, hospitality added 53,000 and government jobs increased by 33,0000.
Retailers shed 28,000 jobs, but some analysts expect holiday-season hiring lagged this year because of a late Thanksgiving.
The Fed has struggled to pull inflation down to the target 2%, with the most recent personal consumption expenditures index increasing 2.3% year-over-year in October, a higher rate of inflation than September’s 2.1% growth.
Getting inflation to 2% has been hampered primarily by shelter costs, Colyar said, as the U.S. continues to grapple with a housing affordability crisis exacerbated by the pandemic. Most other goods and services have roughly fallen in line with the Fed’s goals.
“Those price pressures are tame, and that's what the Fed's concerned about,” he said. “That's what their long-term outlook looks at, is demand just outstripping supply? And that’s not the case for those cyclical things.”
