The US economy added 227,000 nonfarm payrolls in November, surpassing expectations of 214,000 and rebounding from October’s hurricane-impacted 36,000. The Bureau of Labor Statistics (BLS) reported the stronger-than-expected figure on Friday, alongside an unemployment rate increase to 4.2%, as anticipated.
Nonfarm payrolls
The BLS releases monthly data as part of its Employment Situation Report. Nonfarm payrolls is a key indicator, measuring the total number of paid workers, excluding farm workers (their seasonal pattern can provide a distorted view of broader economic trends).
This month, the addition of 227,000 jobs marks a significant rebound from October’s 36,000 but remains below September’s 255,000.
By sector:
- Health care: +54,000 jobs
- Leisure and hospitality: +53,000 jobs
- Government: +33,000 jobs
- Social assistance: +19,000 jobs
However, retail trade shed 28,000 jobs heading into the holiday season.
Average hourly earnings rose 0.4% month-on-month and 4% year-on-year, slightly exceeding forecasts.
However, despite the gain in jobs, the unemployment rate increased to 4.2%. Ie, the number of job-seekers increased faster than the number of jobs created.
Implications
November’s gains reflect the easing of disruptions caused by October’s Hurricane Milton (which made landfall in Florida on 10 October) and the Boeing strike (13 September to 4 November). Employment in transportation equipment manufacturing rebounded as striking Boeing workers returned to their jobs.
Market analysts view the data as a green light for the Federal Reserve to implement another interest rate cut in its December 18 meeting. Market-implied odds for a 25-basis-point reduction surged above 88% following the report. The Fed has already cut 50 basis points in September and 25 in November.
Ellen Zentner, Chief Economic Strategist at Morgan Stanley, stated: “The economy continues to produce a healthy amount of job and income gains, but a further increase in the unemployment rate tempers some of the shine in the labor market and gives the Fed what it needs to cut rates in December.”
Reaction
Stock futures rose, reflecting investor optimism.
Treasury yields declined, consistent with the increased likelihood of a rate cut.
The US dollar weakened slightly as markets priced in additional easing.