US hiring was stronger than expected in November, while unemployment held steady
US job gains were unexpectedly robust in November despite efforts to cool the economy, while unemployment held steady and wages ticked up, the government reported Friday.
The figures provide little relief to officials who have been fighting to tamp down decades-high inflation amid concerns that elevated costs could become entrenched.
The world’s biggest economy added 263,000 jobs in November, Labor Department data showed, down from a revised 284,000 figure in October.
The unemployment rate remained low at 3.7 percent.
The US central bank has raised its benchmark interest rate multiple times this year to ease demand, with higher lending costs making it more pricey to borrow funds to buy cars and homes, or expand businesses.
While such policy tightening may ordinarily lead to job losses, economists have noted that firms are reluctant to shed workers they may have struggled to find since the Covid-19 outbreak.
Demand remains resilient as well, with recent data showing that household spending picked up in October, another reason for firms to avoid job cuts.
Average hourly earnings for private sector workers rose 18 cents to $32.82 last month and over the last 12 months, wages have grown 5.1 percent, according to Friday’s data.
The report also said there were notable job gains in leisure and hospitality, health care as well as in government.
But employment dipped in retail trade, and in transportation and warehousing.
Noting the uptick in wages, President Joe Biden told reporters Friday that things are “moving in the right direction.”
– ‘Far too hot’ –
Although the interest-sensitive housing sector has slowed on the Federal Reserve’s rate hikes and there have been job cuts in tech, economic activity has generally remained resilient.
The labor market “remains far too hot for the Fed,” said ING economist James Knightley in an analysis.
Tightness in the jobs market, as firms compete to find and retain workers, has implications on rising wages –- and these add to the costs of delivering services.
Meanwhile the jobless rate was steady as labor participation, which is still below pre-pandemic levels, fell once more, Knightley said.
“Overall, the data are signaling ongoing positive momentum in job growth and still-elevated wages,” said Rubeela Farooqi of High Frequency Economics in a note.
Richmond Fed President Thomas Barkin cautioned in a separate speech Friday that the US may be moving into an environment where labor supply is constrained for a longer time, adding to price pressures.
Analysts believe the latest data supports further tightening of monetary policy by the US central bank, sending US stocks lower.
– Steep rate hikes –
While the Fed has signaled this week it might be time to moderate its aggressive campaign to cool the economy, there remain questions over how much higher rates have to go to bring inflation under control, said Fed Chair Jerome Powell.
The central bank has raised borrowing rates six times this year in hopes of easing demand, including four steep rate hikes, while walking a fine line to avoid tipping the economy into a recession.
A tight labor market has limited hiring ahead of the holiday season, but “employers are also hiring more cautiously” given uncertainty over the strength of consumer spending, said Sophia Koropeckyj of Moody’s Analytics.
Some industries have been pulling back, though not necessarily letting go of workers, in part explaining the low jobless rate, she added.
The trend of wage increases appears stable, but analysts have been “hoping to see a clear softening,” said Ian Shepherdson of Pantheon Macroeconomics.
“Even if inflation drops faster than expected over the next few months,” he said, policymakers “will be worried about a rebound in the second half of 2023 and beyond if wage growth does not slow.”
