U.S. job growth jumped in November, adding 227,000 jobs

CNN-

Job growth jumped in November, an expected rebound after hurricanes and strikes sharply distorted October data.

However, beyond the pendulum swing of recent months, the US labor market remains stable but is cooling and has still not shaken fears of further weakening.

It's a bit of a mixed bag, Cory Stahle, an economist at Indeed, told CNN. Currently, the momentum appears to be generally positive.

The U.S. economy added 227,000 jobs last month as striking and struggling employees returned to work and supported a steady stream of job gains, according to Bureau of Labor Statistics data released Friday.

Economists expected 200,000 jobs to be created and the unemployment rate to remain at 4.1%, according to FactSet consensus estimates.

The November report was expected to be a palate cleanser after an October was muddied by temporary job losses from back-to-back hurricanes as well as a widespread strike at Boeing.

The initial October report showed a modest creation of 12,000 jobs in total. Although this figure was revised upward (as expected) to a net gain of 36,000 in the November report, it is nonetheless the smallest monthly increase since December 2020. As such, November seen a disproportionate increase in workers returning to work.

However, the unemployment rate rose last month, from 4.1% to 4.2%, and a growing number of jobless Americans are taking longer to find jobs, reflecting a decline in hiring. People remain unemployed for an average of 23.7 weeks (more than five months), the longest duration since April 2022, according to data released Friday.

The job market is healthy even if it is moving, in the long term, in an unhealthy direction, Noah Yosif, chief economist of the American Staffing Association, told CNN on Friday. What we're seeing is actually a K-shaped duality of outcomes for the labor market: It's good if you have a job, but it's very, very difficult if you don't have a job.

The health care, government, leisure and hospitality sectors generated the lion's share of last month's job gains, as they have for much of the past year. However, overall employment growth was slightly more widespread than in recent months.

The manufacturing sector saw one of its biggest increases in months, with 26,000 jobs; However, much of this can be attributed to the return to work of striking Boeing machinists.

The retail sector recorded a loss of 28,000 jobs for the month, which at first glance seems shocking due to the ongoing holiday season; However, the November report likely reflects the fall of Thanksgiving and Black Friday at the end of the month as well as seasonal adjustment factors, Elise Gould, senior economist at the Economic Policy Institute, told CNN.

Wage growth was stronger than expected, at 0.4% for the month, and held steady at a 4% annual increase.

Big pay increases appear to be holding up while other Covid-era distortions fade, Elyse Ausenbaugh, head of investment strategy at JPMorgan Wealth Management, wrote in a commentary published Friday.

But I want to note two things: First, the gains could continue to help consumers' wallets and confidence adjust to higher price levels brought on by inflationary pressures in recent years, she wrote. Second, there is no need for the Fed to focus on recalibrating its policy.

Through November, the U.S. economy added an average of 180,363 jobs per month (September's job gains were also revised upward, by 32,000, for a new total of 255,000 jobs).

The monthly average since the start of the year is considerably weaker growth than that seen during the post-pandemic rebound; however, the current monthly average is very much in line with what was observed between 2010 and 2019 (which included the longest period of employment expansion on record).

And today's job market is also becoming historic: With November's gains, the United States has added jobs for 47 consecutive months, making it the third longest period of employment expansion on record.

Beyond the records, the health of the labor market and the extent to which this slowdown constitutes an actual weakening remains a crucial factor for the U.S. economy as well as the future direction of the Federal Reserve's monetary policy.

Layoffs remained moderate, but unemployment increased. In fact, this is the first time since 2021 that the unemployment rate has exceeded 4% for six consecutive months.

The demand-driven low unemployment rate significantly increases the chances the Fed will make cuts in December, Stephanie Roth, chief economist at Wolfe Research, told CNN on Friday.

The labor market enters 2025 on solid footing and with enough resilience to still be able to make a soft landing, Stahle said, referring to the relatively rare success of the Fed in controlling high inflation without triggering a recession.

However, what happens next remains a question mark. According to economists, certain factors could encourage it to rise again, stagnate or even collapse.

When you start to see hiring and new job market opportunities decline, there comes a point where those declines start to snowball, and that can be very detrimental to the economy, said Yosif, of the American Staffing Association.

A key, potentially antagonistic influence is already underway: After holding interest rates at a 23-year high for more than a year, the Fed lowered its benchmark rate by half a point in September and another quarter of a point in November.

It takes approximately three to six months for monetary policy to fully permeate the labor market. Given the cost that employers see when considering hiring new employees, I think we are in a good position to start seeing some growth based on the federal government's election to accelerate rate cuts.

However, even if the Fed cuts rates further at its meeting this month, a full point of reduction will not be enough, Yosif added.

Employers will certainly want additional confirmation that rate cuts will be reduced in a sustainable way before they actually start making long-term decisions about posting new opportunities and hiring for those opportunities, he said.

However, this decision-making calculation could very well be affected by other elements outside the endogenous economic sphere.

In 2025, former President Donald Trump returns to the White House and has promised to implement sweeping policy changes, including massive tariff increases on the United States' largest trading partners and mass expulsions of undocumented immigrants upon taking office next month.

Additionally, members of Trump's team have pledged to drastically cut federal spending, which could lead to massive layoffs.

We know the job market doesn't exist in a vacuum, said EPI's Gould. Policymakers have a role to play in keeping the economy strong. I think what we've seen is measured rate cuts, and I think we'll continue to see that.

She added: “It remains to be seen what policymakers will do that could impact the labor market; but it is towards a fairly solid labor market that the transition is moving.

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