Jobs Report Stronger Than Expected (Again)

Employment up by 199,000, unemployment down to 3.7%

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Today’s jobs report is the last nail in the recession-in-2023 coffin (I’m charitably assuming that those predictions hadn’t already been pronounced dead). U.S. employers added 199,000 jobs in November, about 15,000 more than expected, and the unemployment rate fell to 3.7%, the lowest rate since July and pretty close to the half-century low.

Heading into today, the big concern was that the unemployment rate, which had climbed from 3.4% in April to 3.9% in October, would keep rising. Not only did the unemployment rate fall in November, it fell for the right reason: more people getting jobs as opposed to fewer people in the workforce.

So yes, the headline numbers in today’s report were strong. But the details were also great. The labor force grew by more than half a million people, and the labor force participation rate inched back up to 62.8%. Wage growth remains strong, but not so strong that it raises inflation concerns (earnings have increased at about a 3.4% annual rate over the past three months).

If you really want to scrounge for a downside in this data, about 30,000 of the added jobs were autoworkers returning from strike. Excluding those positions, greater than 80% of the monthly gain occurred in just two segments: healthcare and government.

And then there’s the temporary help services segment (think staffing firms), which lost nearly 14,000 jobs in November and has lost jobs in nine of the past ten months. This segment is traditionally thought to be predictive of future hiring activity.

But this is quibbling. Government employment has been slow to bounce back from the pandemic and was due for a rebound, and who needs a staffing firm when jobs are so readily available?

Big picture: the economy is making a gradual descent toward a soft landing, but the plane hasn’t touched down just yet. The Fed needs to pull up in time to avoid a recession, and the timing on that will be tricky. Which is to say, there’s still a chance that things will go wrong from here. While I put the odds of a downturn at well below 50%, Anirban still thinks this cycle of interest rate increases ends in recession.

Odds and Ends

• Women accounted for 49.9% of all employees in November, just below the all-time high of 50.1% set in December 2019.

• The labor force participation rate for those with disabilities increased to 24.8%, just 0.1 percentage points below August’s all-time high. I assume this has a lot to do with remote work.

• Trade, transportation, and utilities employment fell by 35,000 for the month, but we can chalk that up to seasonal adjustments that don’t reflect how holiday hiring trends have changed since the pandemic (the segment also lost a ton of jobs in November 2022).

• The share of the labor force unemployed for 15 weeks or longer fell to 1.3%, the lowest level since July. 

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