November jobs report: US hiring stayed strong as employers add 263,000 despite inflation, economy
The country’s employers hired briskly in November despite high inflation and a slow-growing economy – a sign of resilience in the face of aggressive US Federal Reserve rate hikes.
The economy added 263,000 jobs while the unemployment rate remained at 3.7%, still near a 53-year low, the Labor Department said on Friday. November job growth fell only slightly from October’s 284k gain.
New hires had increased significantly over the past month. All year long, as inflation has skyrocketed and the Fed has pushed through ever-higher lending rates, America’s job market has defied the skeptics, creating hundreds of thousands of jobs month after month.
The strength of November’s hiring growth will raise concerns that the Fed may have to keep interest rates high longer than many had anticipated. The reaction on Wall Street was immediate as Dow Jones Industrial Average futures fell nearly 400 points.
As employers continued to hire, wage increases followed. In November, the average hourly wage rose 5.1% year-on-year, a robust increase that could complicate the Fed’s efforts to contain inflation. In a speech this week, Fed Chair Jerome Powell stressed that jobs and wages are growing too fast for the central bank to curb inflation quickly. The Fed raised interest rates to almost 4% from near zero in March in an attempt to push inflation back towards its 2% target for the year.
Meanwhile, steady hiring and soaring paychecks have helped US households boost the economy. In October, consumer spending rose at a healthy pace, even when adjusted for inflation. Americans increased their purchases of cars, restaurant meals, and other services.
After contracting in the first six months of the year, the US economy expanded at a strong annual rate of 2.9% in the last quarter. In addition to strength in consumer spending, a surge in exports helped boost growth.
Though steady hiring and rising wages have fueled their spending, Americans are also increasingly turning to credit cards to keep up with higher prices. Many are also digging into saving, a trend that may not continue indefinitely.
Some signs of weakness have raised concerns about a likely recession next year, in part because many fear the Fed’s rapid rate hikes will derail the economy. In the technology, media and retail sectors in particular, a growing number of companies have announced high-profile layoffs.
Alongside job cuts at tech giants like Amazon, Meta and Twitter, smaller companies – including DoorDash, real estate firm Redfin and retailers Best Buy and the Gap – have announced they are laying off employees.
And in November, a measure of factory activity fell to levels suggesting manufacturing is contracting for the first time since May 2020.
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