WASHINGTON: US employers hired more workers than expected in November and increased wages despite mounting worries of a recession, but that will probably not stop the Federal Reserve from slowing the pace of its interest rate hikes starting this month.
The Labor Department’s closely watched employment report on Friday also showed about 186,000 people left the labor force last month, keeping the unemployment rate steady at 3.7%. Labor market tightness and strength keeps the Fed on its monetary policy tightening path at least through the first half of 2023. Fed Chair Jerome Powell said on Wednesday the US central bank could scale back the pace of its rate increases “as soon as December.” Fed officials meet on Dec. 13 and 14.
“The Fed has more work to do and we look for further 50 basis points rate hikes in December and in February, with the potential for tightening needing to go on for longer,” said James Knightley, chief international economist at ING in New York.
Nonfarm payrolls increased by 263,000 jobs last month. Data for October was revised higher to show payrolls rising 284,000 instead of 261,000 as previously reported.
Economists polled by Reuters had forecast payrolls increasing 200,000. Estimates ranged from 133,000 to 270,000. Employment growth has averaged 392,000 per month this year compared with 562,000 in 2021.
Hiring remains strong despite technology companies, including Twitter, Amazon and Meta, the parent of Facebook, announcing thousands of jobs cuts.
Economists say these companies are right-sizing after over-hiring during the COVID-19 pandemic, noting that small firms remain desperate for workers.
There were 10.3 million job openings at the end of October, with 1.7 openings for every unemployed person, many of them in the leisure and hospitality as well as healthcare and social assistance industries.
US stocks opened lower. The dollar rose against a basket of currencies. US Treasury prices fell.
RESTAURANTS LEAD THE WAY
The gains in employment last month were led by the leisure and hospitality sector, which added 88,000 jobs, most of them at restaurants and bars. Leisure and hospitality employment remains down 980,000 from its pre-pandemic level.
There were 45,000 jobs added in healthcare, while government payrolls increased 42,000. Construction employment increased by 20,000 jobs despite the housing market turmoil, while manufacturing added 14,000 jobs.
But retail trade employment fell by 30,000 jobs, with most of the losses in general merchandise stores. Transportation and warehousing payrolls decreased by 15,000 jobs.
With the labor market still tight, average hourly earnings increased 0.6% after advancing 0.5% in October. That raised the annual increase in wages to 5.1% from 4.9% in October. Wage growth peaked at 5.6% in March.
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