(The Hill) — The U.S. economy gained 263,000 jobs in November and the unemployment rate held even at 3.7 percent, according to data released Friday by the Labor Department.
Job growth in November beat the expectations of economists, who projected the U.S. to gain roughly 200,000 jobs last month, according to consensus projections. The unemployment rate remained just 0.2 percentage points above its pre-pandemic level as the job market continued to push through high inflation and rising interest rates to grow at a sturdy clip.
The U.S. had added an average of 392,000 jobs per month since the start of the year despite high inflation, lagging labor force participation, and Federal Reserve rate hikes meant to cool off historically strong job gains.
“This is a labor market that still doesn’t look like one about to tip into recession. The theme for much of 2022 has been that the labor market has been substantially more resilient than expected,” said Daniel Zhao, lead economist at Glassdoor, in a Friday analysis.
“But along with that, inflation has also been more stubbornly high than expected, so moving forward, the path to a soft landing runs through falling inflation while the job market is still robust enough to withstand a recession.”
While job growth has slowed from the torrid gains seen in 2021, the U.S. is still adding far more jobs per month in 2022 than it did in the economic boom years leading up to the COVID-19 recession in March 2020. The U.S. also had roughly two open jobs for each unemployed American as recently as September, according to Labor Department data.
The November jobs report is another sign of resilience for the U.S. economy, which has defied expectations and keeps growing at a solid pace. But another strong month for the labor market could force the Fed to take even harsher action to slow the economy—and hiring—into a more sustainable pace.
Wage growth accelerated in November despite the Fed’s attempts to make it easier for businesses to hire workers at lower costs. Average hourly earnings shot up 0.6 percent in November and were up 5.1 percent over the past 12 months, accelerating after appearing to slow earlier this year.
Labor force participation and the employment-population ratio also flatlined, which forced employers to compete from a smaller pool of potential workers.
“It’s one report – not a trend, yet – but the Fed needs to see pay gains come in more before it can get inflation to a manageable level,” said Callie Cox, U.S. investment analyst at eToro, in a Friday analysis.
“Wages are often the biggest costs for employers, and companies pass those costs along to higher prices.”
The Fed’s interest rate-setting monetary policy panel is set to meet on Dec. 13-14 and is expected to issue another rate hike. Fed Chair Jerome Powell said Wednesday that while the bank is likely to reduce the size of rate hikes as soon as this month, the bank has “a long way to go” before inflation will fall back to pre-pandemic levels.