The Line: Job Growth Higher than Expected Last Month

The Line: Job Growth Higher than Expected Last Month

  
Brown Harris Stevens Monday, December 9, 2024 3 Min Read

By Gregory Heym, BHS Chief Economist and and host of Crossing The Line

It's the first Friday of the month, so let's get right to the November employment report.

Job Growth Higher than Expected Last Month

The U.S. economy added 227,000 jobs in November, slightly higher than 214,000 Dow Jones estimate. This is certainly welcome news after just 12,000 jobs were created in October.

Let’s break down the details of the report by putting items in one of three categories: the good, the OK, and the uh-oh.

The good:

  • Not only did November job growth beat expectations, the data for September and October was revised upward by a total of 56,000. This tells us that October’s bad number was just a temporary phenomenon due to two hurricanes and the Boeing strike. The sharp decline in weekly jobless claims since the beginning of October also tells us that.

  • There was a big rebound in leisure and hospitality employment, from an increase of just 2,000 in October to 53,000 last month.

  • Wages rose 0.4% in November and are 4.0% higher than a year ago. Both figures were above estimates.

The OK:

  • The unemployment rate ticked up to 4.2%. This figure has remained in a range of 4.1%-4.3% since June.

  • 32,000 of the jobs created last month were due to Boeing workers returning after their strike.

The Uh-oh:

  • The bulk of the job growth remains in either the government or government-supported industries like health care. We need to see more private sector hiring.

  • The labor force participation rate—the percentage of working-age people either working or looking for work—fell to 62.5%, its lowest level since May. This figure is important because even with the uptick in hiring there are still over 7.7 million job openings out there.

  • According to the household survey, the economy actually lost 355,000 jobs last month. The divergence of this figure and the payroll survey is both concerning and frustrating. The payroll survey is the larger of the two, but when there’s such a difference in the numbers you can’t help but wonder which one’s correct.

  • The strong wage growth over the past few months will keep upward pressure on prices in the months to come. I know I already put this in the good section, but that was because higher wages are good for working class Americans. They’re just not good in the fight against inflation.

For those who may be wondering, while this jobs report shows strong hiring and even stronger wage growth last month, I—and most economists out there—still expect the Fed to cut rates by 0.25% later this month. Don’t expect mortgage rates to come down too much however, as inflation remains above the Fed’s 2% annual target.

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Posted by Hannah Minnick, BHS Content Team