The U.S. labor market experienced a slowdown in November, with employers adding 64,000 jobs. The unemployment rate increased to 4.6%, up from 4.4% in September, reaching its highest level in over four years. This data was released in a delayed report from the Labor Department on Tuesday.
The release of job tallies for October and November was postponed due to a six-week federal shutdown, which impacted the government's ability to collect labor market data. The October report indicated a net loss of 105,000 jobs, primarily influenced by a reduction in the federal workforce, as 162,000 government workers who had accepted buyouts earlier in the year were officially removed from payrolls. Due to furloughs of federal workers, the unemployment rate for October could not be determined.
Sectoral Performance
In November, some sectors recorded job gains. Health care added 46,000 jobs, and construction added 28,000 jobs. Conversely, the manufacturing sector continued to show a decline, losing 5,000 jobs in November, following a loss of 9,000 in October. The leisure and hospitality sector also saw a reduction of 12,000 jobs last month.
Federal Reserve Actions
In response to the evolving labor market conditions, the Federal Reserve lowered its benchmark interest rate last week. This marked the third rate reduction since September. Federal Reserve Chairman Jerome Powell commented on the labor market, noting it "seems to have significant downside risks," and highlighted its importance to individuals' employment and ability to find work.
Factors Influencing the Labor Market
Monthly job gains have decreased since the beginning of the year. Official numbers may be subject to downward revision early next year when more complete information becomes available.
The slowdown in hiring is attributed to two main factors:
- A decrease in employer demand for new workers.
- A reduction in the number of individuals actively seeking new jobs. This includes an increase in retirees from the baby boomer generation and limitations on workforce growth due to current immigration policies. These factors indicate the economy requires fewer monthly job additions to maintain a stable unemployment rate.
Wage Growth
Average wages in November increased by 3.5% compared to a year ago, which contributes to workers' purchasing power. However, the pace of wage gains has slowed this year. Inflation reports were also disrupted by the government shutdown, with an overdue cost-of-living report for November scheduled for release on Thursday.