EXPLAINER: 5 key takeaways from the November jobs report

Dec 2, 2022, 12:06 PM | Updated: 1:00 pm
File - People walk below an In-N-Out Burger restaurant sign in San Francisco, Thursday, Aug. 25, 20...

File - People walk below an In-N-Out Burger restaurant sign in San Francisco, Thursday, Aug. 25, 2022. The nation's employers kept hiring briskly in November despite high inflation and a slow-growing economy. Much of the growth came in education and health care, and a category made up mostly of restaurants, hotels, and entertainment firms. (AP Photo/Jeff Chiu, File)

(AP Photo/Jeff Chiu, File)

WASHINGTON (AP) — For nearly nine months, the Federal Reserve has relentlessly raised interest rates to try to slow the U.S. job market and bring inflation under control.

And for just as long, the job market hasn’t seemed to get the message.

The November employment report the government issued Friday was no exception. Employers added 263,000 jobs — a substantial gain that was far above economists’ expectations. Wages rose robustly, too, further intensifying the inflationary pressures the Fed has been struggling to contain.

And the unemployment rate remained at 3.7%, barely above the half-century low of 3.5%.

Friday’s hiring data left economists scratching their heads over the job market’s resilience and the continuing need of many employers for more workers.

“The Fed is tightening monetary policy, but somebody forgot to tell the labor market,” said Brian Coulton, chief economist at Fitch Ratings.

The Fed’s inflation challenge began after the economy roared back from the pandemic recession two years ago, causing vast shortages of goods and sending prices soaring. After assuming — falsely — for months that high inflation would prove short-lived, the Fed finally began raising its key short-term rate in March this year.

Since then, its rate hikes have been recurrent and aggressive. The Fed has raised its benchmark rate six times, including four straight increases of three-quarters of a point — far larger than the usual quarter-point hikes. Later this month, it’s expected to raise its key rate by an additional half-point.

Because the Fed’s rate affects borrowing rates across the economy, its hikes have had the effect of making loans much costlier for consumers and businesses. The idea is that individuals and companies would then cut back on borrowing and spending, and employers would slow their hiring.

But the economy — and especially the job market — have proved surprisingly durable in the face of the Fed’s anti-inflation campaign, a fact underscored by Friday’s strong jobs numbers.

The central bank’s goal is to achieve 2% annual inflation. It has a long way to go, to say the least: The most recent inflation report showed consumer prices up 7.7% from a year earlier.

Here are five takeaways from the November jobs report:

___

TOO HOT FOR THE FED

Last year, the economy added a record 6.7 million jobs, and it tacked on an average of 457,000 a month more from January through July this year. Since then, hiring has cooled, to a monthly average of 277,000 from August through November. Yet it’s still running way too hot for the Fed’s inflation fighters and is consistently beating forecasters’ expectations.

With nearly two job openings for every unemployed American, companies are struggling to find workers and retain the ones they have. A tight job market tends to keep upward pressure on wages and to feed into inflation.

“This is another solid report that shows just how difficult it is going to be for the Fed to get inflation back to target,” economists Thomas Simons and Aneta Markowska of the investment banking firm Jefferies wrote in a research note Friday.

____

RISING WAGES

Average hourly earnings rose 0.6% from October to November — the strongest month-to-month gain since January. And measured over the past 12 months, average pay was up a more-than-expected 5.1%,

“We had been hoping to see a clear softening,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Hourly pay gains were especially strong in November for workers in retail, transportation and warehousing and “information,” a category that includes some technology jobs.

“Wage growth is likely to continue to remain elevated until we see a meaningful normalization in labor demand,” said Thomas Feltmate, senior economist at TD Economics.

____

HELP WANTED: RESTAURANTS AND BARS

Restaurants and bars added 62,000 jobs last month. The healthcare industry took on a net 45,000 new workers in November. That sector has been adding 47,000 jobs a month this year, up from an average of just 9,000 a month in 2021.

Factories added 14,000 jobs in November. That gain occurred even though an index issued by the Institute for Supply Management showed that U.S. manufacturing activity fell last month for the first time since May 2020, when the economy was reeling from the COVID-10 outbreak.

Last month, the economy also added 20,000 construction workers. But in a sign that higher interest rates are squeezing the housing market, the number of employees at homebuilding companies actually fell in November by 2,600.

____

MISSING WORKERS

The number of people who either have a job or are looking for one — the total labor force — declined by 186,000 in November. It was the third straight monthly drop.

The figure remains slightly below where it stood in February 2020, just before COVID slammed into the U.S. economy. The proportion of the adult population in the labor force — the participation rate — amounted to 62.1% last month, well below the pre-pandemic 63.4%.

The shortfall in available workers has been caused by a combination of early retirements, reduced immigration, COVID-19 deaths and a shortage of affordable child care. The shortage represents a setback in the fight against inflation: If employers had more workers to choose from, they would be under less pressure to bid up wages and thereby contribute to inflation pressures.

____

TWO SURVEYS, TWO STORIES

Friday’s report sent some mixed signals about the level of employment in the United States.

The Labor Department’s survey of businesses delivered the headline number of 263,000 added jobs. But the department also surveyed households, and they told a different story: The number of people who said they had a job fell by 138,000 in November after having dropped by 328,000 in October.

The survey of businesses, called the “establishment survey,” tracks how many jobs are added across the economy. The separate survey of households is used to calculate the unemployment rate.

The two surveys sometimes tell different tales, as they did in October and November, though the disparities tend to even out over time.

For its establishment survey, the department asks mostly large companies and government agencies how many people they had on their payrolls.

For its household survey, it asks households whether the adults living there have a job. Those who don’t have a job but are looking for one are counted as unemployed. Those who aren’t working but aren’t seeking work are not counted as unemployed.

Unlike the establishment survey, the household survey counts farm workers, the self-employed and people who work for new companies. It also does a better job of capturing small-business hiring.

But the results of the household survey are likely less precise. The government surveys just 60,000 households. By contrast, it surveys 131,000 businesses and government agencies for the establishment survey.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

French parliament to debate Macron’s pension reform bill

PARIS (AP) — French President Emmanuel Macron’s unpopular planned pension changes have prompted strikes and street demonstrations in recent weeks. Now, his government is facing a harsh political battle at parliament. The National Assembly on Monday starts debating the contested bill, which would notably raise the minimum retirement age from 62 to 64. The parliamentary […]
3 hours ago
Nurses of the nearby St. Thomas' Hospital stand on the picket line, in London, Monday, Feb. 6, 2023...
Associated Press

UK nurses, ambulance crews strike, straining health system

LONDON (AP) — Tens of thousands of nurses and ambulance staff walked off the job in the U.K. on Monday in what unions called the biggest strike in the history of the country’s public health system. The walkout is the latest in a wave of strikes that has disrupted Britons’ lives for months, as workers […]
3 hours ago
Nissan Chief Executive Makoto Uchida speaks during a Renault Nissan Mitsubishi press conference in ...
Associated Press

Renault, Nissan boards agree to equalize mutual stakes

LONDON (AP) — The boards of Renault and Nissan gave their approval Monday to equalize the stake each automaker holds in the other, bringing a better balance in the French-Japanese alliance. Under the decision, both companies will own 15% in the other. Up to now, Renault Group of France owned 43.4% of Nissan Motor Co., […]
3 hours ago
A member of opposition Congress party who was protesting demanding an investigation into allegation...
Associated Press

Adani woes spur protests as stock turmoil turns political

NEW DELHI (AP) — Hundreds of demonstrators from India’s main opposition party turned out Monday in India’s capital New Delhi and other cities demanding an investigation into allegations of fraud and stock price manipulation by India’s second-biggest business group, headed by coal mining tycoon Gautam Adani. In New Delhi, Congress Party workers threw fake currency […]
3 hours ago
FILE - Residents wait in line to receive the Ebola vaccine in Beni, Congo DRC on July 13, 2019. A c...
Associated Press

‘Loophole’ excuses WHO officials accused of misconduct

LONDON (AP) — A confidential U.N. report into the alleged missteps by senior World Health Organization staffers in the way they handled a sexual misconduct case during an Ebola outbreak in Congo found their response didn’t violate the agency’s policies because of what some officials described as a “loophole” in how WHO defines victims of […]
3 hours ago
Snow covers a tree in central Athens with the ancient Parthenon temple on the Acropolis hill seen i...
Associated Press

Greece: Snow reaches Acropolis, halts services

ATHENS, Greece (AP) — High winds and a cold snap in Greece halted ferry services and highway traffic and dusted the Acropolis and other ancient monuments in Athens with snow on Monday. The inclement weather prompted authorities in greater Athens in close schools and courthouses and suspend debates in parliament. Cellphone alerts sent by authorities […]
3 hours ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Company looking for oldest air conditioner and wants to reward homeowner with new one

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.
(Photo via MLB's Arizona Fall League / Twitter)...
Arizona Fall League

Top prospects to watch at this year’s Arizona Fall League

One of the most exciting elements of the MLB offseason is the Arizona Fall League, which began its 30th season Monday.
...
Quantum Fiber

How high-speed fiber internet can improve everyday life

Quantum Fiber supplies unlimited data with speeds up to 940 mbps, enough to share 4K videos with coworkers 20 times faster than a cable.
EXPLAINER: 5 key takeaways from the November jobs report