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The numbers: The return of striking workers helped boost the number of new jobs created in November by 199,000 and wages rose sharply, but the latest job report also pointed to some softening in the labor market as high interest rates take a toll on the U.S. economy.
Economists polled by the Wall Street Journal had forecast 190,000 jobs.
The latest employment report was somewhat weaker if the return of up to 50,000 striking Hollywood and auto-industry employees is set aside.
Most of the new jobs were also concentrated in healthcare and government. Other major industries either did little hiring or cut jobs.
The unemployment rate, meanwhile, fell to a four-month low of 3.7% from 3.9%, the government said Friday. Some half a million people entered the labor force, and more job seekers found work.
The biggest surprise in the report was a sharp 0.4% increase in average hourly earnings, the largest gain in four months.
The yearly increase in wages was unchanged at 4%. The Federal Reserve wants to see hiring slow even further and the growth in wages to decelerate to 3% or so before it rules out further increases in interest rates.
Still, the economy appears to have lost steam toward year-end after a surprisingly strong burst of growth in the third quarter. Higher interest rates have cratered home sales, sapped business investment and discouraged consumers from buying big-ticket items.
The Fed has jacked up interest rates to try to temper the economy and bring down high inflation. With the effects of higher borrowing costs filtering through the economy, the Fed is widely expected to leave rates unchanged next week at its last big meeting of the year.
Key details: Employment rose by 150,000 if government is excluded. Public-sector jobs increased by 49,000 last month.
The increase in private-sector jobs was even smaller after accounting for the end of the United Auto Workers and Hollywood screenwriters strikes.
Most of the new jobs — almost 100,000 — were created by the healthcare industry.
One clear sign the economy is slowing is that only a few industries are doing most of the hiring now. Earlier in the year, many more companies were adding jobs.
On the other hand, the share of the population working or looking for work rose a tick and matched a postpandemic high of 62.8%. That means people still think it’s easy to find a job.
When more people look for work, companies don’t have to raise wages as much, and that can help to lower inflation.
The initially reported 150,000 increase in jobs in October was left unchanged, but the government revised employment growth in September down to 262,000 from 297,000.
Big picture: The job market is quite strong, but some of the paint might be starting to peel. Job openings have declined and hiring has slowed since early in the year.
The labor market could soften further if the Fed, as expected, keeps interest rates high through next spring. Higher borrowing costs have slowed the economy, especially in interest-rate-sensitive areas such as housing and manufacturing.
Yet as long as companies have enough customer demand, they are unlikely to resort to widespread layoffs, which would put the economy in danger of recession.
Looking ahead: The report “paints a picture of a cooling, but not collapsing job market and is therefore consistent with the soft-landing narrative,” said James Knightly, chief international economist of ING.
“While we’ve been seeing some cooling in recent months, job growth is still strong by historical standards,” said senior economist Jesse Wheeler of Morning Consult. “And the 3.7% unemployment rate reflects an economy where the vast majority of those who want a job can get a job.”
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX
fell slightly in Friday trades. The yield on the 10-year Treasury
BX:TMUBMUSD10Y
edged up to 4.21% amid disappointment in the increase in wages.
