November Jobs Come in Hotter Than Forecast at 199K, as Unemployment Rate Falls

In another sign the labor market refuses to buckle, employers added 199,000 jobs in November, above forecasts, the Labor Department reported on Friday.

The unemployment rate, meanwhile, fell to 3.7% from the 3.9% level of October.

Economists had expected a monthly reading of around 180-190,000 although some had pushed that above 200,000 in recent days. The number was a significant increase from the 150,000 posted in October.

Gains came in health care and government sectors that had been slow to recover from the COVID-19 pandemic, But employment also increased in manufacturing as striking autoworkers returned to work. The retail sector posted job declines.

“This is what a soft landing looks like,” RSM US Chief Economist Joe Brusuelas posted on social media. “I like full employment & so should you.”

On Wednesday, private payroll firm ADP said that its monthly survey of employers showed 103,000 new jobs were created in November, lower than expectations and slightly below the 106,000 added in October. The services sector increased by 117,000 and medium-sized firms accounted for roughly half of the overall gains.

And on Tuesday, the government said the number of job openings in late October fell to 8.7 million from the prior 9.35 million level. That is still a high number by historical standards but is down considerably from its heights of 2022.

The slowdown in the labor market is exactly what the Federal Reserve is looking for ahead of its meeting next week. The Fed has been on pause with interest rates since July, and most analysts expect it to signal that the hiking cycle is over for now. Inflation has been receding and bond yields have fallen in recent weeks in anticipation of potential cuts in interest rates next year as the economy cools.

“Going into 2024, the labor market is increasingly looking steady despite being much more downbeat, which the Federal Reserve is likely to take as an encouraging sign that it remains on the path to bring inflation down,” LinkedIn Senior Economist Kory Kantenga wrote Thursday ahead of the jobs report.

A solid labor market boosts consumer confidence and broader economic activity, Odeta Kushi, deputy chief economist at First American, said. “For the Fed, this is one more notch in the direction of a soft landing and likely makes further rate hikes unnecessary.”

In many ways, the latest jobs numbers show the U.S. economy has returned to a more normal state following three years of disruptions from the COVID-19 pandemic that saw upheavals in the job market, supply chains and energy sector.

Daniel Swan, co-leader of McKinsey’s global operations practice, says that while the economy overall appears to be doing well, a lot depends on the specific sector.

“Consumers have really slowed down their consumption,” Swan says. “But other parts are going gangbusters.”

In particular, Swan says there are more than half a million unfilled manufacturing jobs, and many companies in that sector are also investing heavily in automation but that those jobs require skills that many workers do not yet have.

“Everywhere you turn, everyone is announcing a new manufacturing plant,” Swan says.

Stephen Rich, chairman & CEO of Mutual of America Capital Management, said that “with low unemployment and increased wages, middle-class consumers are, in theory, better equipped to handle rising prices and borrowing costs, but they’re still navigating a challenging environment. There are signs that finances are becoming strained, especially as personal savings rates drop, consumer borrowing is up and many young consumers have resumed their student loan payments.”