November jobs report comes in stronger than expected

Employers picked up the hiring pace in November, shaking investors’ confidence in the Federal Reserve’s likelihood of cutting interest rates in 2024. 

November job gains grew faster than expected, posting an increase of 199,000 jobs in November, up from 150,000 in October, according to data released by the Bureau of Labor Statistics. 

Employment growth stayed below the average monthly gain of 240,000 over the previous 12 months but aligned with job growth in recent months.

While the numbers signal positive momentum in the job market, it may cause the Fed to reconsider its next moves, said Mike Fratantoni, SVP and chief economist with the Mortgage Bankers Association (MBA).

“Interest rates jumped in response to this report, as job market strength may be enough to keep the Fed cautious with respect to any comments regarding the path for rates at their December meeting,” Fratantoni said in a statement. “Inflation is declining, but further declines are likely dependent upon some slowing in the job market. We continue to forecast that the Fed will begin to cut rates in the spring of 2024, as job market trends are likely to weaken from here.”

In November, job gains occurred in health care, government and manufacturing. Meanwhile, employment in retail trade declined.

The unemployment rate slipped to 3.7% in November, down slightly from 3.9% in October. The number of unemployed Americans showed little change at 6.3 million.

Average hourly earnings increased by 0.4% for the month, slightly ahead of the 0.3% estimate, and up 4% from a year ago, in line with expectations.

On Tuesday, job openings slid to 8.7 million in October, the lowest level since March 2021. It brought the ratio of openings to available workers down to 1.3 to 1.

Overall, many economists remain bullish about a “soft landing” scenario.

According to Selma Hepp, chief economist at CoreLogic, the slowing growth pace of new jobs, the slowing of wage growth and the modest rise in the unemployment rate suggest a cooling of the economy in the coming year.