Job creation bounced back in November after disruptions from storms and a major strike, reinforcing a picture of modest employment expansion over the past several months.
The U.S. economy added 227,000 jobs, seasonally adjusted, the Labor Department reported Friday. With upward revisions to September and October figures, the three-month average gain is 173,000, slightly higher than the average over the six months before that.
The unemployment rate ticked up to 4.2%, from 4.1% in October, as fewer people were able to find work. But for those who had jobs, wages jumped more than expected and were 4% higher than they were a year earlier.
“I think that we are normalizing from a great post-pandemic labor market to a very good longer-run labor market,” said Gus Faucher, chief economist for PNC Financial Services Group. “I don’t want to say that we’ve definitely achieved a soft landing, but certainly we think this is what a soft landing looks like.”
The public mood seems to be brightening as well, as inflation has receded while layoffs remain low. The University of Michigan’s consumer sentiment index notched a seven-month high in the initial December reading.
The employment numbers were flattered by the return of some 37,000 manufacturing workers after strikes were resolved at Boeing and one of its suppliers. Recovery in Florida and North Carolina from Hurricanes Helene and Milton was likely to have played a role in the outsize addition of 53,000 jobs in leisure and hospitality.
That aside, the main category driving growth was health care and social assistance, which has structural tail winds as the country’s population ages. Outside of the aerospace rebound, manufacturing shed positions. The retail sector lost 28,000 jobs last month, probably because of seasonal adjustment factors, as holiday season hiring has been anemic.
The report was subdued enough to boost investor bets on an interest-rate cut from the Federal Reserve, which meets in two weeks. The path forward for interest rates remains uncertain, however, with the incoming Trump administration promising tariffs and immigration curbs that could end up fueling inflation.
Stocks rose modestly Friday, and bond yields were down slightly.
A wide range of data shows that the economic pendulum has swung from its torrid churn at the peak of the pandemic to a state of sluggish movement in and out of jobs. Workers who may have switched employers several times between 2020 and 2022 are now staying put, and employers are trying to hold on to them rather than opening new positions.
It’s possible that stability is behind the recent improvements in productivity, as workers gain more proficiency over longer periods in one job. That allows employers to pay them more without facing pressure to pass along labor cost increase to consumers.
“It’s remaining firm and sticky, but not necessarily in a bad way,” Sarah House, a senior economist at Wells Fargo, said of wage increases. “The existing workers we have are being more productive, and that’s allowing businesses to increase their pay at a pretty nice pace.”
A tumble in job openings over the past two years has been accompanied by a long slide in the number of people working through temporary staffing services, which have lost nearly 600,000 positions since peaking in March 2022. The sector is notoriously cyclical, with employers looking for flexible help to cope with spikes in demand, but it’s now well below prepandemic levels.
Timothy Landhuis, vice president of research at Staffing Industry Analysts, said that was mostly a consequence of manufacturing’s doldrums, since that was where most temporary roles were concentrated. But both the white-collar and blue-collar sides of the industry are struggling, as employers have sought to keep their full-time workers busy.
“You could call it a temp staffing recession,” Landhuis said. “Sometimes what happens with HR and procurement departments is that there’s an overcorrection. They set goals, and they probably overcut it.”
That’s not necessarily bad for workers. The still-low unemployment rate indicates that people losing temporary jobs may have found direct employment instead.
That light demand for labor may also partly explain a plateau in labor-force participation for people in their prime working years. The share of people working or looking for work had substantially outperformed expectations, driven largely by increasing flexibility in workplaces powered by videoconferencing and instant messages. But the trend seems to have run its course, and the labor force has shrunk by more than 400,000 workers over the past two months.
“There’s not much more juice to squeeze,” said Thomas Simons, a U.S. economist at investment bank Jefferies. “There’s a certain level past which there aren’t going to be that many more people between 25 and 55 working because of different life circumstances.”
The frozen job market is also tough for those who are looking for work. Although initial claims for unemployment insurance have remained low, continuing claims — people who are still drawing unemployment checks — have been drifting upward. The median duration of unemployment jumped to 10.5 weeks, from nine weeks a year earlier.
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