5 key takeaways from November’s job report

WASHINGTON – For nearly nine months, the Federal Reserve has relentlessly hiked interest rates to try to slow the US jobs market and bring inflation under control.

And for just as long, the job market doesn’t seem to have gotten the message.

The November jobs report released by the government on Friday was no exception. Employers added 263,000 jobs — a significant gain that far exceeded economists’ expectations. Wages also rose sharply, adding to the inflationary pressures that the Fed has been trying to dampen.

And the unemployment rate stayed at 3.7%, just above the half-century low of 3.5%.

Friday’s hiring data left economists scratching their heads over the resilience of the job market and the continued need for more workers by many employers.

“The Fed is tightening monetary policy, but someone forgot to tell the labor market,” said Brian Coulton, chief economist at Fitch Ratings.

The Fed’s inflation challenge began after the economy recovered from the pandemic recession two years ago, leading to huge commodity shortages and soaring prices. After months of – mistakenly – assuming that high inflation would prove short-lived, the Fed finally began raising its short-term interest rate in March of this year.

Since then rate hikes have been repetitive and aggressive. The Fed has raised interest rates six times including four straight raises of three quarters of a point – much larger than the usual quarter-point hikes. Later this month it is expected to raise its key interest rate by another half a point.

Because the Fed’s interest rate affects lending rates across the economy, its hikes have made borrowing much more expensive for consumers and businesses. The idea is that individuals and businesses would then limit borrowing and spending, and employers would slow hiring.

But the economy – and particularly the job market – has proved surprisingly resilient in the face of the Fed’s anti-inflation campaign, a fact underscored by Friday’s strong payrolls release.

The central bank’s goal is to achieve annual inflation of 2%. It still has a long way to go, to put it mildly: the latest inflation report showed that Consumer prices increased by 7.7% compared to the previous year.

Here are five takeaways from the November jobs report:



Last year, the economy added a record 6.7 million jobs, and from January to July this year, an average of 457,000 more were added each month. Since then, August-November hiring has declined to an average of 277,000 per month. However, things are still far too hot for the Fed’s anti-inflation policy, consistently beating forecasters’ expectations.

With nearly two job openings for every unemployed American, businesses are struggling to find and retain workers. A tight labor market tends to keep upward pressure on wages and fuels inflation.

“This is another solid report that shows how difficult it will be for the Fed to get inflation back on target,” economists Thomas Simons and Aneta Markowska of investment bank Jefferies wrote in a research note on Friday.



Average hourly earnings rose 0.6% from October to November – the largest month-on-month increase since January. And as measured over the last 12 months, average compensation increased by a better-than-expected 5.1%.

“We were hoping for a significant slowdown,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Hourly gains in November were particularly strong for workers in retail, transportation and warehousing, and information, a category that includes some technology jobs.

“Wage growth is likely to remain elevated until we see significant normalization in labor demand,” said Thomas Feltmate, senior economist at TD Economics.



Restaurants and bars added 62,000 jobs last month. The healthcare industry hired a net 45,000 new employees in November. This sector has added 47,000 jobs per month this year, compared to an average of just 9,000 per month in 2021.

The factories created 14,000 jobs in November. That increase came despite an index released by the Institute for Supply Management showing that manufacturing activity in the US fell last month for the first time since May 2020, when the economy has been suffering from the COVID-10 outbreak.

Last month, the economy also added 20,000 construction workers. But in a sign that higher interest rates are weighing on the housing market, the number of people employed by homebuilders actually fell by 2,600 in November.



The number of people who either have a job or are looking for one — the total number of people in the labor force — fell by 186,000 in November. It was the third consecutive monthly decline.

The number remains slightly below where it was in February 2020, just before COVID hit the US economy. The adult population as a proportion of the labor force — the labor force participation rate — was 62.1% last month, well down from the 63.4% pre-pandemic.

The shortage of available labor was caused by a combination of early retirement, lower immigration, COVID-19 deaths and a lack of affordable childcare. The shortage represents a setback in the fight against inflation: if employers had more workers to choose from, they would be under less pressure to raise wages and thereby contribute to inflationary pressures.



Friday’s report sent some mixed signals about employment levels in the United States.

The Labor Department’s business survey produced the headline figure of 263,000 additional jobs. But the department also surveyed households, and they told a different story: The number of people who said they had a job fell by 138,000 in November, after falling by 328,000 in October.

Dubbed the “business survey,” the business survey tracks how many jobs are being created across the economy. The separate survey of households is used to calculate the unemployment rate.

The two polls sometimes tell different stories, as they did in October and November, although the differences tend to even out over time.

For its company survey, the ministry primarily asks large companies and government agencies how many employees they have on their payrolls.

For its household survey, it asks the households whether the adults living there are employed. If you don’t have a job but are looking for one, you are considered unemployed. Those who are not working but are not looking for work are not counted as unemployed.

Unlike the establishment survey, the household survey covers farm workers, the self-employed and people working for new businesses. It also does a better job of tracking small business hiring.

But the household survey results are likely to be less accurate. The government only surveys 60,000 households. For the company survey, on the other hand, she interviewed 131,000 companies and authorities.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, transcribed or redistributed without permission.

https://www.local10.com/business/2021/12/03/explainer-5-key-takeaways-from-the-november-jobs-report/ 5 key takeaways from November’s job report

Sarah Y. Kim

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