U.S. Job Market Overview
The U.S. economy added 64,000 jobs in November, while the unemployment rate increased to 4.6%. This marks an increase from 4.4% in September and represents the highest unemployment rate recorded in over four years.
Report Delays and October Figures
The November jobs report, along with October's data, was released on Tuesday following delays caused by a six-week federal government shutdown. The shutdown impacted the Labor Department's ability to monitor the job market.
The October report indicated a net loss of 105,000 jobs. This decline was primarily driven by a reduction in the federal workforce, with 162,000 government employees officially removed from payrolls after participating in buyouts earlier in the year. The unemployment rate for October remains unknown, as furloughed federal workers were unable to conduct household surveys for that month.
Sector-Specific Performance in November
During November, certain sectors experienced job growth, including:
- Health care: added 46,000 jobs
- Construction: added 28,000 jobs
Conversely, other sectors recorded job losses:
- Manufacturing: lost 5,000 jobs (following a loss of 9,000 in October)
- Leisure and hospitality: cut 12,000 jobs
Federal Reserve Actions
In response to developing labor market conditions, the Federal Reserve reduced its benchmark interest rate last week for the third time since September. Federal Reserve Chairman Jerome Powell stated that the labor market appeared to have "significant downside risks."
Factors Contributing to Labor Market Slowdown
Monthly job gains have decreased since the beginning of the year. Powell indicated that official figures might be revised lower in early next year as more comprehensive data becomes available. The slowdown in hiring is attributed to two primary factors:
- Employers are seeking fewer new workers.
- Fewer individuals are actively seeking new employment.
Contributing to the reduced pool of available workers are the retirement of a significant number of aging baby boomers and the impact of immigration policies on the growth of the U.S. workforce. Consequently, the economy now requires fewer monthly job additions to maintain a stable unemployment rate.
Wage Growth and Inflation
Average wages in November were 3.5% higher than the previous year, indicating that paychecks are generally increasing faster than prices, thereby boosting workers' purchasing power. However, the rate of wage gains has decelerated during the current year. Inflation reports were also affected by the government shutdown, with an overdue cost-of-living report for November scheduled for release on Thursday.