Total nonfarm employment increased by 263,000 last month, surpassing analysts’ expectations of 200,000 new positions. The unemployment rate was unchanged from the previous month at 3.7%.
“The November employment report delivers a holiday season package of good news for American workers, including a strong increase in wages,” Bankrate Senior Economic Analyst Greg McBride said in comments provided to The Daily Wire. “In keeping with the classic divide sometimes seen between Main Street and Wall Street, the report tells the Federal Reserve it has more work to do in its battle against inflation, meaning higher interest rates to come.”
The central bank has indeed been eyeing employment data as officials roll back nearly three years of aggressive monetary stimulus, including near-zero target federal funds rates and the purchase of government securities from market actors. Policymakers have raised rates by three-quarters of a percentage point on four consecutive occasions, leading to chaos in the housing market and raising the cost of borrowing money for consumers and businesses.
Industries such as leisure and hospitality, healthcare, government, information, and manufacturing witnessed a “generally good distribution of job growth,” according to McBride, who observed that “retailing as well as warehousing and distribution posted job declines” in an unexpected reality for the holiday season. Amazon and FedEx revealed plans to dismiss employees ahead of the critical period for logistics companies; the former will lay off employees in human resources, retail, and devices, while the latter will furlough delivery drivers.
Businesses have faced labor shortages as the number of positions available exceeds the number of workers available to fill them. “There continues to be a detrimental disconnect or imbalance between the supply and demand for labor,” McBride continued. “Demand broadly appears to remain remarkably strong, but any number of factors are continuing to weigh on the supply of prospective workers with labor force participation falling over the past two months and still below pre-pandemic levels.”
Federal Reserve Chair Jerome Powell remarked on Wednesday that the workforce “participation gap” is largely a result of “excess retirements” that occurred beyond “what would have been expected from population aging alone,” even as young people largely return to the job market.
Gains in nominal wages continued to lag behind rising price levels, implying an overall decrease in household purchasing power. While average hourly earnings rose 5.1% year-over-year as of November, the most recent inflation report from the Bureau of Labor Statistics showed 7.7% headline inflation as of October; price level data has not yet been released for last month.
The robust employment data will likely lead Federal Reserve officials to continue hiking interest rates. Some analysts have criticized policymakers for causing harm through their excessive zeal to manage inflation soon after a prolonged increase in the money supply.
“The Federal Reserve checks the box off on this report now less than two weeks away from its next policy-setting session,” McBride remarked. “In any case, Federal Reserve officials are intent on raising the benchmark rate further into restrictive territory. Even if the central bank eases up as expected on the magnitude of rate increases, the journey likely continues in 2023 toward a higher ultimate rate destination in the pursuit of restraining inflation.”