November 30, 2022

US labor market tightening; The unemployment rate fluctuates with pre-epidemic declines

  • Non-agricultural wages increase by 210,000 in November
  • The unemployment rate is declining from 4.6% to 4.2%
  • Average hourly earnings up to 0.3%; The work week rises to 34.8

Washington, Dec. 3 (Reuters) – US job growth slowed sharply in November amid job losses at retailers and local government educational institutions, but the unemployment rate fell to a 21-month low of 4.2%, indicating a sharpening labor market.

The unemployment rate has fallen by a quarter to one-tenth of a point since October, the highest in 13 months, when the Labor Department added 594,000 workers to its workforce on Friday in its scrutiny employment report. Workers spend more hours, raising gross wages, which helps support consumer spending.

“Don’t be fooled by the meager wage jobs available this month because the machinery of the economy is really on the overdrive shown by the fall in unemployment,” said Christopher Roopke, chief economist at FWDBONDS in New York.

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According to a business survey, non-agricultural wages increased by 210,000 jobs, the lowest level since last December. But the economy generated 82,000 more jobs than initially announced in September and October, a sign of strength. This puts 3.9 million jobs below the peak in February 2020.

Non-farm wages

Despite a slump in hiring in November, this reflected a small gain in the leisure and hospitality sector, adding 6.1 million jobs this year. The unemployment rate has fallen by 2.1 percentage points since January.

President Joe Biden, whose approval rating has fallen amid anger over high inflation, said the economy was stronger than it had been before the COVID-19 epidemic and that the country could “look forward to a brighter, happier New Year.”

“But despite this improvement, I also know that families are worried about Govt. They are still more concerned about the cost of living and the economy,” Biden said in a speech on the economy. “You need to know that I’m listening to you. It is not enough to know that we are moving forward.”

Economists say the economy is very close to maximum employment, which could lead to an increase in interest rates in advance from the Federal Reserve.

Federal Reserve Chairman Jerome Powell told lawmakers this week The US Federal Reserve should consider Accelerates the acquisition of its massive bonds at its December 14-15 policy meeting.

“The central bank’s report will be sufficient to expedite property purchases at the December meeting, marking the end of purchases in March,” said Andrew Hollenhorst, chief economist at Citigroup in New York. “Furthermore, an unemployment rate that will fall below 4.0% in the coming months will keep the first central bank rate hike firmly on schedule in June or earlier.” Economists conducted by Reuters predict that wages will increase by 550,000 jobs. Hiring continues to be hampered by staff shortages. At the end of September there were 10.4 million jobs.

U.S. stocks fell sharply. Dollar (.DXY) Was equal against the basket of coins. U.S. Treasury revenue has declined. read more

Tight labor supply

People line up outside the Kentucky Business Center on June 18, 2020, hoping to get help for their unemployment claim in Frankfurt, Kentucky, USA. REUTERS / Bryan Woolston

Job growth slowed to 20,400 jobs in the retail sector. State and local government education employment fell by 12,600 jobs. This led to a 25,000-fold drop in overall government jobs, the fourth consecutive month of decline.

Staff fluctuations related to epidemics have distorted the normal seasonal patterns in state and local government education.

The leisure and hospitality sector added only 23,000 jobs compared to 170,000 in the previous month. Wages for professional and business services have increased by 90,000 jobs. There were also solid gains in transportation and warehouse and construction. The manufacturing sector has added 31,000 jobs.

Moderate job growth in November did not dampen expectations that the economy was ready for strong growth this quarter, after hitting a slowdown in the third quarter.

The performance of the service sector reached a new record level in November. read more

U.S. consumer spending and manufacturing activity is strong. As companies fight for a shortage of workers, costs must be supported by rising wages. The average hourly earnings increase was 0.3% in November, while the annual increase in wages was 4.8%. The average work week has increased from 34.7 to 34.8 hours. As a result of the long working week, total pay rose 0.7%.

But the widespread use of the new, highly contagious Omicron variant of COVID-19 poses a threat to the bright picture. While little is known about the impact of Omicron, there may be some recession in hiring and demand for services based on the experience of delta variation that has led to slower economic growth for more than a year in the last quarter.

While labor supply is tight, there are signs that some of the millions of Americans who lost their jobs during the epidemic-induced recession are re-emerging into the workforce.

A small survey of households with an unemployment rate, the labor force participation rate, or the proportion of Americans working or looking for work was 61.8%. This is the highest level since March 2020 and was 61.6% in October.

The increase is concentrated in those aged 20-54. About 274,000 women aged 20 and over joined the labor force. The number of employees is below the pre-infection level of 2.4 million.

Stock in the labor market

Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania, said:

The household survey showed employment for 1.14 million people. The employment-to-population ratio, which is considered a measure of the economy’s ability to create jobs, has risen to 59.2% from 58.8% between March 2020 and October.

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Report by Lucia Muttigani; Editing Sisu Nomiyama and Paul Simao

Our standards: Thomson Reuters Trust Principles.