United States: Payrolls miss expectations in November, wage growth remains stable
The November jobs report released by the Bureau of Labor Statistics (BLS) shows payroll gains softened considerably compared to the previous month. Non-farm payrolls increased by 155,000 in November, down markedly from a revised 237,000 in October (previous estimate: +250,000) and missing market expectations of 190,000. This led the three-month average payroll gains to decline from 214,000 in October to 170,000 in November. Nevertheless, November represented the 97th consecutive month of job creation, the longest streak on record in the U.S. economy.
On a sector-by-sector basis, payroll gains remained robust in manufacturing, healthcare and social assistance, and wholesale trade, while job growth in retail sales rebounded after the revised contraction logged in October. Gains in the warehousing and transportation sector—which has been struggling with shortages of available truck drivers in recent months—also accelerated. On the flipside, job growth in professional and business services, as well as leisure and hospitality slowed markedly.
The labor force participation rate was stable in November at October’s 62.9%, as was the unemployment rate, which remained at a nearly 50-year low of 3.7% in November. Both numbers matched analysts’ expectations. With respect to earnings, the November data showed largely stable upward pressure, mildly disappointing analysts. Wage growth was stable at October’s 3.1% year-on-year in November, slightly missing expectations of 3.2%. On a month-on-month basis, hourly earnings inched up 0.2%, up from October’s revised 0.1% but was below expectations of 0.3%.
Taken together, the relatively subdued employment data from November is consistent with a mild slowdown of the economy going forward, which has been interpreted by markets as an early sign of a likely less aggressive pace of interest rate increases from the Federal Reserve. Indeed, although market participants—and FocusEconomics Consensus Forecast panelists—still mostly expect the Fed to raise rates at its December meeting, recent declarations from Fed Chairman Jerome Powell and other FOMC members have hinted at a more gradual rise in interest rates from 2019 onwards, as the institution is increasingly concerned with downside risks to growth.