According to the Federal Reserve’s (FED) announcement, U.S. job growth accelerated in November and the unemployment rate dropped to 3.7% even as more people entered the labor force, pointing to underlying strength in the labor market.
Nonfarm payrolls increased by 199,000 jobs last month, the Labor Department’s Bureau of Labor Statistics (BLS) said on [12/9/2023]. Economists polled by Reuters had forecast 180,000 jobs created.
In the field of healthcare, staffing has significantly increased, creating 77,000 new jobs, especially in ambulance services and healthcare facilities. The government has also contributed an additional 49,000 jobs through increased recruitment at the local level.
The manufacturing sector has also added 28,000 new jobs, particularly in the automotive and parts industries, following the return of UAW union workers after a strike against the Detroit ‘Big Three’ automakers.
Meanwhile, employment in the entertainment and hotel industry has increased by 40,000, mainly due to increased staffing in restaurants and bars. The film and recording industry has also seen growth with 17,000 new jobs.
However, the retail sector has lost 38,000 jobs, attributed to declines in grocery stores, furniture stores, and electronics stores. Some economists suggest that this decline may be related to seasonal data adjustments.
In contrast, the transportation and warehouse sector lost 5,000 jobs, raising questions about the future of employment in this field, continuing a trend with 13,600 positions lost.
This report comes at a crucial time for the U.S. economy, as the Federal Reserve closely monitors the employment situation in efforts to control inflation.
Market forecasts indicate that the Fed may pause its tightening cycle and begin interest rate cuts next year. However, central bank officials still warn of uncertainties. Charts suggest that the first rate cut could occur in March 2024, though this has become more likely following the employment report, making May a higher possibility.
The upcoming Fed policy meeting will be crucial, with investors seeking signals on how officials perceive the economic situation. Expectations are that they will take measures to keep the economy stable, with hopes that inflation will return to 2%.
Most economists continue to believe that the Fed will begin monetary policy easing in the second half of 2024 as inflation moderates.
These hopes have been sustained by the University of Michigan survey released on Friday, showing consumer inflation expectations for the next 12 months decreased to 3.1% in December, the lowest since March 2021, down from 4.5% in November.
The Fed has increased the policy rate by an additional 525 basis points, currently at 5.25%-5.50%, since March 2022.
In the stock market, Wall Street stocks are rising, and the dollar is also gaining against other currencies, while the price of U.S. silver is decreasing.
The increasing labor supply over time may help alleviate wage inflation. Average hourly earnings increased by 0.4% last month after a 0.2% rise in October. This maintains the annual wage growth at 4.0% in November. However, wages are rising too fast to bring inflation down to the 2% target.
Data shows that Americans worked more hours last month, a positive sign for economic growth prospects in the fourth quarter. Gross Domestic Product (GDP) is expected to improve, although currently below 2% annually, compared to the impressive 5.2% growth rate in the third quarter.
The average workweek increased to 34.4 hours from 34.3 hours in October. The total weekly hours rose by 0.3%, reversing the 0.2% decline from the previous month.
Chris Low, chief economist at FHN Financial in New York, said, “This is a strong indicator that fourth-quarter GDP prospects will improve as the November data is compiled.”
According to Investing.com
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