by paul gomme and peter rupert
The BLS announced that payroll employment increased 227,000 in November. In addition, October’s estimate was revised up 24,000 and September revised up 32,000. The private sector rose 194,000 after actually shrinking 2,000 in October.
The private service sector gained 160,00, led by the health care and social assistance sector, increasing 72,300. The largest sectoral loss was in retail trade, shedding 28,000 jobs and has had declining employment in 3 of the last 6 months.
Average weekly hours of work rose from 34.2 to 34.3, meaning that total hours of work increased 0.4%. Average hourly earnings increased 0.3%, from $35.48 to $35.61.
The household survey, on the other hand, painted a much weaker picture. By this measure, employment fell 355,000 and the labor force declined by 193,000, leading to a decline in the participation rate to 62.5 from 62.6. The unemployment rate ticked up slightly from 4.15% to 4.25%.
Overall, this was a solid jobs report. The strength of the labor market leaves the FOMC in a bit of a pickle. Markets have priced in a 25 bp cut this month, perhaps encouraged by recent remarks by Fed Governor Christopher Waller. Yet, the real economy is strong and inflation has been inching up over the last several months. Having built expectations of a rate cut, is the FOMC willing to disappoint markets in light of the new data?
