The US economy added more jobs than forecast in November while the unemployment rate ticked higher as the labor market rebounded from a month negatively impacted by severe weather and labor strikes.
Data from the Bureau of Labor Statistics released Friday showed 227,000 new jobs were created in November, just above the 220,000 expected by economists. The unemployment rate increased to 4.2%.
Hurricanes and a strike by Boeing (BA) workers weighed heavily on the October report, which was revised to show there were 36,000 jobs created last month. The unemployment rate stood at 4.1% in October.
Job growth for September was also revised higher on Friday, with revisions now indicating the US economy added 56,000 more jobs than initially reported over those two months.
RSM chief economist Joe Brusuelas told Yahoo Finance that Friday’s report reflects a “remarkably calm labor market” that is at full employment after accounting for October’s distortions.
Wage growth, an important measure for gauging inflation pressures, rose 0.4% in November, in line with October’s increase and higher than the 0.3% rise economists had expected.
Compared to the prior year, wages rose 4% in November, more than than 3.9% that had been forecast.
Meanwhile, the labor force participation rate fell to 62.5% in November, down from 62.6% in October.
In its release, the BLS noted employment in the transportation equipment manufacturing industry rose by 32,000, “reflecting the return of workers who were on strike.” Temporary help services employment rose modestly in November but also marked a turnaround from a loss of over 33,000 jobs in this industry the prior month.
The report comes as investors look for clues on whether or not the Federal Reserve will cut interest rates for the third time this year at its Dec. 18 meeting.
Entering the print, markets were widely expecting the Federal Reserve to cut interest rates by a quarter of a percentage point in December. As of Friday morning, markets are pricing in a nearly 87% chance the Fed cuts rates in December, up from a 66% chance seen a week ago, per the CME FedWatch Tool.
Economists argue that the November jobs report should do little to change that thinking.
“For the Fed, these numbers are going to be right in the spot of what they were looking for and they’re comfortable with to continue easing policy at least at the December meeting,” Citi senior global economist Robert Sockin told Yahoo Finance. “This doesn’t change the narrative that likely rates are restrictive and they have to at least come down a bit more at a gradual pace.”
Sockin added that while the increase in the unemployment rate could be seen as an early sign of concern that the labor market is weakening, the metric remaining in the low 4% range for the past several months is “sort of the definition of a soft landing.”
“When you look over the last several reports, [the Fed will] be fairly comfortable that they’re still getting that soft landing,” Sockin said. “But there are enough risks that I think they still need to lower rates.”
