The U.S. economy added 199,000 jobs in November, according to the Labor Department. This suggests that the labor market still has strength despite a slowdown since the pandemic rebound last year. The unemployment rate also dropped from 3.9 percent to 3.7 percent. However, the increase in employment includes workers who returned to their jobs after strikes, so underlying job growth is slightly weaker. The report indicates that the economy is far from a recession, despite interest rate increases that have impacted consumer spending and business investment. Wages also increased by 0.4 percent, exceeding expectations, and the workweek lengthened slightly.
Most analysts have been surprised by the durability of the recovery, which can be attributed to consumer cash accumulated from federal stimulus and forced savings. This has supported service-industry jobs even as costs rise and mandatory student debt payments resume. The annual inflation rate has fallen to 3 percent, significantly lower than wage growth. Consumer confidence has also increased, while expectations of future inflation have dropped.
The Federal Reserve is expected to continue its pause on interest rate increases during its next meeting. The stock market remained stable after the report, but bond yields rose. Employment growth has narrowed, with gains primarily coming from service industries and the public sector. Temporary help services have seen a decline in jobs, indicating that employers can handle customer requests with their regular staff.
However, businesses dependent on selling physical goods, such as manufacturers and the retail industry, have struggled. Manufacturers have not seen significant growth since the beginning of the year, and the retail industry shed 38,000 positions. The weakening of cyclical sectors is expected to continue, while structural strength in government and healthcare remains.
Overall, the labor market has shown resilience, although wage increases have been limited, making it challenging for some individuals to find stable jobs with decent pay. Forecasters predict a continued weakening in job growth in early 2024 as consumer savings decrease and labor shortages are filled. However, the likelihood of a recession within the next year is considered to be low.