A Muddled Message From the November Jobs Report

Source: Economics Group of Wells Fargo Bank, N.A. Summary The most closely watched numbers in the November employment report were strong. Job growth in November came in above consensus expectations, rising 199K. Even with the beginning and end of major strikes injecting some noise into monthly payroll changes since late summer, payroll growth has averaged 194K since August. The unemployment rate fell two-tenths of a percentage point to 3.7% in November, with robust labor force growth pushing the labor force participation rate back up to its cycle-high of 62.8%. Average hourly earnings growth also picked up a touch, rising 0.4% in November. Yet despite the favorable monthly readings in November, the labor market clearly has cooled over the course of the year. Employment growth continues to come down from its post-pandemic boom, wage growth is slowing and labor turnover has receded as greener pastures at a new employer are not quite as enticing as they were earlier in the expansion. Beneath the headline figures, there are signs that the margins of the labor market are deteriorating, with job gains being more narrowly driven, temporary help employment declining and laid off workers taking longer to find new employment. As we look to 2024, an improving inflation outlook and gradually softening labor market present balanced risks for the FOMC. We believe a continuation of these two trends will induce the FOMC to begin cutting the fed funds rate next summer. READ FULL ARTICLE >>