While the number of jobs created fell far short of analysts’ expectations, the unemployment rate fell to 4.3 percent.
The recovery of the labor market in the United States apparently shifted sharply in November, with the economy contributing only 210,000 jobs, the U.S. Department of Labor said Friday. But while that disappointing number fell far short of most analysts’ expectations, the full job market picture was more encouraging than the prime number indicates.
The country’s unemployment rate fell by a healthy 0.4 percentage points to 4.2 percent last month, closing at its pre-pandemic level of 3.5 percent.
Even more encouragingly, the unemployment rate has dropped as the labor force participation rate – which measures people who have jobs as well as those who are actively looking for work – measures up to 61.8 percent.
Americans still got a paycheck. Average hourly earnings in November increased by 8 cents to $ 31.03 for all workers, while lower-wage workers saw their earnings rise by 12 cents to $ 26.40.
Over the past 12 months, average hourly earnings for all workers have risen by 4.8 percent.
And job creation in September and October was even stronger than first thought. Non-farm payrolls for both months were revised upward with a combined 82,000 posts.
But the emergence of the Omicron variant of the coronavirus could hold winds for the recovery of the labor market.
The path of the virus and the mixed message of the November job report complicate the work of the US Federal Reserve, which has a dual mandate to achieve maximum employment while keeping inflation in check.
The Federal Reserve prioritized getting Americans back to work during the recovery over to keep price pressures in check, as it saw this year’s inflation peak as a temporary consequence of supply chain snooping and shortages due to businesses around the world which reopened en masse.
But during testimony to Congress this week, Fed chief Jerome Powell indicated that a shift in the Fed’s thinking was underway.
He told U.S. lawmakers on Tuesday it was probably time to “retire” the word when describing inflation, saying the Fed could speed up its settlement of bond purchases that helped keep long-term borrowing costs low. A faster slimming down could lay the groundwork for an inflation-cooling interest rate hike sooner than expected.
And on Wednesday, Powell said that even though most economists see price pressure easing by the middle of next year: “We can not act as if we are sure of it.”
While November job numbers were a big miss, the U.S. labor market is so strong that Americans are resigning their jobs in record numbers. Firms are also struggling to fill an almost record number of jobs, with many increases and better benefits to attract scarce workers.
As businesses pay more for workers and raw materials, these costs are passed on to US consumers. In October, consumer price inflation rose at the fastest pace in 30 years.
Powell reiterated on Wednesday that the Fed has not yet seen any evidence of a so-called “wage price spiral” developing. It is a cycle in which larger wage checks lead to businesses raising prices to cover those higher labor costs, leading to workers asking for another increase.
“We’ve seen wages rise significantly,” Powell said. “We do not see them moving upwards at a worrying rate that tends to cause higher inflation, but it is something we are watching very carefully.”
Despite having to contend with rising prices, consumer spending was strong in October. But inflation takes a toll on consumers’ attitudes about the economy’s prospects as well as their own income.
Consumer confidence fell in November after rising slightly the previous month, the Conference Council said on Tuesday. And that survey of consumer attitudes dated before the inception of Omicron.