U.S. employers added a solid 199,000 jobs in November while the unemployment rate fell, signaling a robust labor market that appears set to achieve the elusive “soft landing” of cooling pandemic-era inflation while avoiding a recession.
Friday’s report from the Labor Department showed that the unemployment rate dropped from 3.9% to 3.7%, not far above a five-decade low of 3.4% in April.
The November gain was a reminder that many employers continue to hire, though last month’s increase was inflated by the return of about 40,000 formerly striking auto workers and actors, who were not at work in October but returned in November.
November’s figure was below the monthly average of about 240,000 new jobs this year, but other signs also indicated a healthy job market: The employment-to-population ratio, which measures what portion of people have a job, hit its highest level since the pandemic at 60.5. And the number of long-term unemployed workers and those working part-time who would prefer full-time work edged down.
“Today’s jobs report is boring in all the right ways. Jobs growth was in line with expectations and the unemployment rate stepped back from the edge, showing that we’ll be exiting 2023 without a recession,” Daniel Zhao, senior economist at job site Glassdoor, said in an email.
The job market is gradually decelerating along the lines that Fed officials have wanted to see. The Fed has raised its key short-term rate from near zero to about 5.4%, a 22-year peak, leading to higher borrowing rates for consumers and businesses and lower inflation. Despite that headwind, the economy and the job market are still expanding. Layoffs remain historically low.
“The labor market seems to have plateaued with today’s news slightly better than expected, but mostly in line with projections. The jobs data should not give the Fed reason to move on interest rates next week and instead it’s another sign that we may already be experiencing a soft landing,” Eric Merlis, managing director and co-head of global markets at Citizens, said in an email.
When the Fed meets next week, it is sure to keep its benchmark rate unchanged for the third time in light of the easing inflation pressures. Most economists and Wall Street traders think the Fed’s next move will be to cut rates, though that might not happen until the second half of 2024.
Even modest hiring helps ensure consumers, who drive most of the economy’s growth, keep spending. Early reports on holiday shopping showed healthy growth in online sales.