November Hiring Defies Expectations
Total nonfarm payroll employment rose by a better-than-expected 266,000 in November, the Bureau of Labor Statistics reported Friday.
BLS said the unemployment rate held steady at 3.5 percent, reflecting notable job gains in health care and in professional and technical services. Employment also rose in manufacturing, reflecting the return of workers from an October labor strike involving General Motors..
BLS revised up total nonfarm payroll employment for September by 13,000, from +180,000 to +193,000, and October by 28,000 from +128,000 to +156,000. With these revisions, employment gains in September and October combined were 41,000 more than previously reported. After revisions, job gains have averaged 205,000 over the past three months.
“The November jobs report was another piece of good news for the housing market,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting with the Mortgage Bankers Association. “We continue to see growth in the purchase market, supported by steady job gains and slowly-increasing housing inventory. Payroll growth surged by 266,000 jobs in November–the strongest monthly gain since January.”
Kan said November’s numbers, combined with upward revisions to the prior two months, raised the average for 2019 to nearly 180,000 jobs per month, “which still indicates a very strong labor market. The unemployment rate ticked down slightly to 3.5 percent and matched the 50-year low. Wage growth increased 3.1 percent compared to last November and has lately been more closely aligned with home-price appreciation. Lower mortgage rates and moderating home prices help homebuyer affordability.”
The report said the number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, was essentially unchanged in November and accounted for 20.8 percent of the unemployed. The labor force participation rate was little changed at 63.2 percent in November. The employment-population ratio was 61.0 percent for the third consecutive month.
BLS said average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $28.29. Over the past 12 months, average hourly earnings have increased by 3.1 percent. Average hourly earnings of private-sector production and nonsupervisory employees rose by 7 cents to $23.83.
The report said the average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in November. In manufacturing, the average workweek increased by 0.1 hour to 40.5 hours, while overtime decreased by 0.1 hour to 3.1 hours. The average workweek of private-sector production and nonsupervisory employees held at 33.5 hours.
“The trend in hiring has turned decidedly higher since the summer, but we do not expect the recent pace to last,” said Sarah House, global economist with Wells Fargo Securities, Charlotte, N.C. “The November employment report backed up October’s surprisingly strong release with another impressive showing.”
House noted overall, the labor market remains tight. “The Fed has signaled it will be on hold for at least its upcoming meeting after its 75 basis points of insurance cuts since this summer,” she said. “With the labor market more than holding up, we see no reason for that to change now.”
Odeta Kushi, Deputy Chief Economist with First American Financial Corp., Santa Ana, Calif., said the report supports the argument that “we’re not facing an imminent recession.”
“Approximately 70 percent of U.S. economic growth is driven by consumer spending,” Kushi said. “The outlook for consumer economic strength remains strong, especially given that job creation continues, and wages are rising.”
Kushi added the numbers point to a more competitive housing market next year. “Job growth is steady, the unemployment rate fell to 3.5 percent, a 50-year low, and wages are rising modestly, which bolsters Americans’ spending power,” she said. “Housing is the most durable consumer good we’ll ever buy and surging house-buying power fuels greater potential demand in a supply-constrained market. There’s no evidence that these dynamics will change in 2020.”
