In a sign that the labor market is refusing to buckle under the weight of higher interest rates and a cooling economy, a better-than-expected 263,000 jobs were added in November, the Labor Department reported on Friday.
The figure exceeded predictions of 200,000, and October’s estimate of 261,000 was revised upward to 284,000. Meanwhile, the unemployment rate held steady at 3.7%.
“Notable job gains occurred in leisure and hospitality, health care, and government,” the report said. “Employment declined in retail trade and in transportation and warehousing.”
In contrast to the 0.3% forecast, wages increased by 0.6% for the month and by 5.1% annually.
“Amid concerns of a recession, it is encouraging to see this strong jobs report follow a more robust third-quarter GDP growth rate,” said Steve Rick, chief economist at CUNA Mutual Group. “We expect unemployment to remain below the natural rate of 4.5% this year. Still, we will continue to pay particular attention to the labor force participation rates, as they play a critical role in today’s inflation battle.”
Markets dived on the news, with futures on the Dow Jones Industrial Average dropping by 400 points before steadying somewhat.
The Federal Reserve’s campaign of raising interest rates to fight inflation won’t be significantly altered by the report. As some goods’ prices and overall inflation have decreased over the last few months, the central bank has made some progress. But despite the Fed’s wishes, the job market has continued to exhibit greater resilience.
Fed Chairman Jerome Powell warned Wednesday policy makers are far from done and they would “stay the course,” although he acknowledged the In place of its recent 0.75 hikes, the Fed may reduce the amount of its next rate increase in two weeks, most likely to 50 basis points.
The Fed is hoping for a “just right” ‘ scenario of “a softening pace of job growth that is still robust enough to help ward off recession,” said Senior economist Elizabeth Crofoot of the labor market information company Lightcast
But even if a recession starts up in the coming year, the majority of analysts do not anticipate a sizable wave of layoffs.
“While we expect the unemployment rate will rise in 2023 to a 4.5-5% range considering our base case of a global recession, the lack of labor supply growth over the next three years (0.5% vs 3% historical average) will dampen the magnitude of unemployment increases,” Vanguard’s economists and investment strategy group said Thursday.
While some brand-name tech stocks like Meta, Twitter, Amazon and others have issued layoff notices, there has not yet been a broad-based trend of layoffs across corporate America. The government reported that as of the end of October, there were 10.3 million unfilled positions. 1.7 jobs are available for every worker, which is a high ratio by historical standards.
“Despite shaky numbers and headlines about a recession, the job market has remained durable overall,” says James Neave, head of data science at job search firm Adzuna.
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