November Jobs Report: US Job Growth Remains Robust

The figure is the latest sign that the US economy is still far from a recession, despite a year and a half of interest rate hikes that have depressed consumer spending and business investment. Reinforcing the picture of energetic labor demand, wages rose 0.4 percent this month, more than expected, and the working week became slightly longer.

Most analysts have been surprised by the sustainability of the recovery, which is due in large part to the money consumers have amassed in recent years. That has boosted service sector employment, even despite rising costs, the resumption of mandatory student debt payments and slowing wage growth.

“That’s the definition of a soft landing: it slows down slowly, and that’s what you want,” said Martin Holdrich, a senior economist at Woods & Poole Economics. However, he noted that with strong productivity growth, the continued tightness in the labor market should not lead to the Federal Reserve continuing to raise interest rates.

“These numbers do not indicate an overheated economy and deficits that will drive up inflation,” Holdrich said.

November’s growth was largely in line with recent months and accounted for strike activity, although October saw a decline from the average of 240,000 jobs added per month over the year. During the survey period there were still about 10,000 workers are still on strike in workplaces, including casinos and hospitals.

Job growth has slowed in recent months, with sectors that rely on consumers buying physical goods declining and the services sector accounting for most of the gains. In November, health care added 77,000 jobs and government added 49,000 — both employers less tied to the underlying strength of the economy.

Manufacturers have replenished jobs lost during the auto strikes, but have otherwise stagnated since the start of the year. The retail sector has lost 38,000 jobs on a seasonally adjusted basis, reflecting what the situation appears to be weakest holiday rental season since 2013.

Temporary services, often considered a gauge of labor demand, have cut 14,000 jobs, an indication that employers are not trying to meet rising turnover with temporary workers. This sector has lost 177,000 people since November last year.

The trajectory for most of 2023 points toward exactly the kind of soft landing the Fed is aiming for with its interest rate policy: historically high job openings have steadily declined, initially without a significant increase in unemployment.

While some industries that boomed during the pandemic have lost jobs, others that have struggled to regain workers during the recovery — such as hotels and restaurants — have taken on labor from contract firms, staving off a rise in unemployment.

“If a sector like wholesale or retail starts laying off workers, they could very easily move into something like leisure and hospitality,” said Michael Reid, a U.S. economist at RBC Capital Markets. “As these sectors start to see a decline in spending, we still see strength in health care and social assistance.”

However, the picture has begun to change in recent months, with the unemployment rate rising to 3.9 percent in October due to both permanent layoffs and more people entering the labor market in search of work.

The share of people over 55 who are in the labor force – working or looking for work – fell in 2020 and has not recovered, but the share of people aged 25 to 54 has recovered quickly. It is increasingly clear that women in that age range, who reached record levels of participation this year, have benefited from the wider availability of remote work.

That influx of workers – which includes a recovery in immigration flows – has also clouded wage increases. Combined with an increase in productivity, this means that current wage growth could be in line with the Federal Reserve’s inflation target of 2 percent per year. The annual inflation rate recently fell to 3 percent, less than half of what it was when the Fed’s rate hikes began.

Despite the labor market’s stronger and longer performance to date, most forecasters expect a continued decline in job growth in early 2024 as consumers deplete their savings, cut spending and fill remaining labor shortages.