California: The U.S. labour market showed a strong recovery in November, adding 227,000 nonfarm payroll jobs, driven by hurricane recovery efforts and the end of major labour strikes. However, the unemployment rate rose to 4.2 per cent, signalling a potential slowdown in the labour market. This development could encourage the Federal Reserve to lower interest rates during its upcoming policy meeting on December 17-18.
Labour Market Resilience Amid Challenges
The November job gains surpassed economists’ expectations of 200,000 new jobs, reflecting an economy rebounding from disruptions caused by hurricanes Helene and Milton and strikes in the aerospace sector. Revised figures for September and October showed an additional 56,000 jobs created during those months.
Healthcare led employment growth with 54,000 new jobs across ambulatory services, hospitals, and care facilities. The leisure and hospitality sector added 53,000 positions, mainly in restaurants and bars, while state government hiring contributed 33,000 jobs.
Manufacturing employment rose by 22,000 jobs, with a notable increase of 32,000 in transportation equipment as striking aerospace workers returned to work. However, not all 38,000 striking workers resumed their roles, suggesting December’s data could reflect further gains.
Social assistance saw an increase of 19,000 jobs, while the construction sector posted only modest growth, reflecting slower rebuilding efforts in hurricane-affected areas. Employment gains also occurred in financial services, business services, and temporary staffing, which rebounded after a steep October decline.
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The retail sector, however, shed 28,000 jobs, mainly due to losses at general merchandise retailers. The delayed Thanksgiving holiday may have postponed seasonal hiring, though electronics and appliance stores added 4,000 jobs.
Economic Implications and Fed Policy Outlook
The average job growth over the past three months reached 173,000, highlighting underlying labour market strength despite recent economic disruptions. The share of industries reporting job gains rose to 56.2 per cent from October’s 53.2 per cent.
Economists expect that November’s robust employment report will boost consumer spending, keeping the U.S. economy on a solid path. "The report should soothe both market bulls and bears," chief U.S. economist at BMO Capital Markets Scott Anderson said while citing steady job gains and wage growth as key factors supporting economic stability.
With inflationary pressures moderating, financial markets now predict an 89 per cent probability that the Federal Reserve will lower interest rates by 0.25 per cent this month, up from 72 per cent earlier. The Fed has already cut rates by 75 basis points since September after raising them by 5.25 percentage points between March 2022 and July 2023. The current policy rate stands between 4.50 per cent and 4.75 per cent. Economists remain optimistic about continued job growth as economic conditions stabilize and labour disruptions subside.
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