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November 2023 jobs report: Continued rigor, cooling acceleration

December 11, 2023

The latest BLS data showed that the U.S. economy added 199,000 jobs in November 2023. Read the details of the report and its implications for monetary policy and the markets.

Slow Down yellow road sign on blue sky with clouds background

Key takeaways

The Bureau of Labor Statistics reported that the U.S. economy added 199,000 jobs in November 2023, marking an uptick from October but coming in below the average of the prior 12 months.
The November report includes the impact of workers in the auto and entertainment industries returning to their jobs following labor disputes.
The unemployment rate ticked downward to 3.7% in November, while average hourly wages rose by 12 cents, or 0.4%.

Contributors

China Llanos

Digital Content Writer & Editor, J.P. Morgan Wealth Management

The U.S. economy added 199,000 jobs in November 2023, according to the latest report by the Bureau of Labor Statistics (BLS). A portion of this figure reflects striking workers in the auto and entertainment industries returning their jobs.¹

The reported pace of growth in nonfarm payrolls came in slightly ahead of economists’ forecasts and marks a jump from the 150,000 positions added in October. However, the level of hiring in November was below the monthly average of 240,000 jobs added over the prior 12 months.²

“This marks a continued loosening trend in the labor market but not at a pace that we believe is concerning or indicative of rapid deterioration,” said Sarah Stillpass, Global Investment Strategist for J.P. Morgan Wealth Management. While November’s numbers indicate the labor market remains vigorous, there is certainly a cooling from the accelerated trajectory seen earlier this year.

In conjunction with November’s labor market gains, the unemployment rate fell to 3.7%, down 0.2 percentage points from its level in October. The number of unemployed people remained relatively stable at 6.3 million.³

As the markets look to the jobs data for signs that inflation is reliably coming under control, one potential sticking point is the growth in wages. The BLS reported that average hourly earnings for all nonfarm employees jumped by 12 cents, or 0.4%, in November. Including this uptick, hourly earnings are up 4% over the past 12 months.⁴

The Fed keeps a close eye on wage growth as an indicator of tightness in the labor market and a potential source of upward pressure on prices.

Sector details

Looking at the sector breakdown, health care and government saw the most significant jobs gains in November, adding 77,000 and 49,000 positions, respectively.⁵

The leisure and hospitality sector added 40,000 jobs, with the gains “almost entirely” concentrated in food service and drinking establishments. While November’s growth in leisure and hospitality came in below the monthly average of 51,000 jobs gained over the previous 12 months, the sector’s recovery from the impact of the pandemic remains robust.⁶

The manufacturing sector recorded an increase of 28,000 jobs in November, boosted by the return of 30,000 workers in the motor vehicles and parts industry who had been on strike. Employment in manufacturing has seen only minimal net changes in 2023.⁷

The information sector saw a similar situation in November, with net gains of 10,000 jobs driven by the addition of 17,000 positions in the motion picture and sound recording industries. These results also reflected the impact of workers returning to action after the resolution of labor disputes.⁸

The sectors that saw jobs decline in November included retail trade, which shed 38,000 positions, with half of the losses attributable to department stores. The transportation and warehousing sector saw a minimal decline of 5,000 jobs, with losses in transportation and warehousing partially offset by gains in the air transportation industry.⁹

Potential implications for Fed policy

The Federal Reserve relies on BLS labor market data as an indicator of inflationary pressure in the economy. With the final Federal Open Market Committee meeting of 2023 set for December 12–13,¹⁰ the November jobs report will be under policymakers’ microscope as they evaluate whether inflation has been sufficiently and sustainably tamed by the aggressive campaign of interest rate hikes in March 2022 through July 2023.¹¹ Stillpass holds that, “The recent data across the economy has shown continued cooling following a hot third quarter and is consistent with our view that a softish landing remains on the table from the Fed.”

The Fed opted to hold interest rates steady at its meeting on November 1 – marking the second consecutive decision to maintain rates at their decades-long high. The markets currently anticipate that the central bank will again keep rates at current levels at next week’s meeting, with the CME FedWatch Tool indicating a 98% probability of rates holding steady through December and into 2024.¹²

While Fed Chair Jerome Powell cautioned in a speech on December 1 that “it would be premature to conclude with confidence”¹³ that interest rates have peaked, our strategists feel that further rate hikes are likely off the table. According to Stillpass, “Rate cuts are likely to begin in the second half of next year. Following the report, financial markets moved up their expected timing of rate cuts from July 2024 to June 2024.”

References

Bureau of Labor Statistics. “The Employment Situation — November 2023.”

Ibid.

10.

Federal Reserve. “Federal Open Market Committee: Meeting calendars, statements, and minutes (2018-2024).”

11.

Federal Reserve. “Open Market Operations.”

12.

CME Group. “CME FedWatch Tool.”

13.

Federal Reserve. “Opening Remarks, Chair Jerome H. Powell, At a Fireside Chat at Spelman College, Atlanta, Georgia.”

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