The unemployment rate unexpectedly fell in November, reflecting signs that the labor market may not be cooling as quickly as many had initially thought.
Data from the Bureau of Labor Statistics released today showed the unemployment rate was 3.7% for the month, down from 3.9% in October. The U.S. economy added 199,000 jobs in November, an uptick from 150,000 the previous month as striking auto workers and Hollywood actors came back to the workforce.
Economists surveyed by Bloomberg expected job gains of 185,000 with unemployment holding steady from the prior month at 3.9%.
Wages, a closely watched indicator for inflation and a gauge of how much leverage workers have in the labor market, increased 0.4% on a monthly basis and 4.1% over last year; economists had expected wages to rise 0.3% over last month and 4% over last year.
Meanwhile, the labor force participation rate ticked higher to 62.8%, up from 62.7% the month prior, while average weekly hours worked moved up slightly from 34.3 to 34.4.
The largest jobs increase in Friday’s report was seen in healthcare, where 77,000 jobs were added. Employment in government rose by 49,000, reaching its pre-pandemic level. Leisure and hospitality rose by 40,000.
Labor market data released earlier this week reinforced a narrative in the market for a so-called soft landing, where inflation reaches the Fed’s 2% goal without a full blown economic slowdown.
This had investors betting the Federal Reserve was done hiking interest rates and widely expecting rate cuts in 2024. But with another robust month of job gains and the unemployment rate falling back toward historic lows, investors are now upping bets that the Fed might need to hold interest rates at their current level for longer.
As of Friday morning, markets had priced in about a 47% chance the Fed cuts rates by 25 basis points at its March meeting, down from a 55% chance just a day prior, per the CME FedWatch Tool.
“This isn’t exactly the type of print they were looking for,” Stephanie Roth, chief economist at Wolfe Research, said of the Fed on Yahoo Finance Live Friday morning.
Read the full report here.
Stocks rose Friday morning as investors continue to assess the U.S. monthly jobs report, which could influence the case for the Federal Reserve to start cutting interest rates. After an initial retreat, stocks turned positive, but mostly headed for a weekly loss.
The Dow Jones Industrial Average rose 0.1% or 45 points, while the S&P 500 advanced 0.1%. The tech-heavy Nasdaq Composite gained nearly 0.2%.
While the U.S. added 199,000 jobs in the month of November, consumer sentiment rose by 13.2% month-over-month alongside falling inflation expectations. Interactive Brokers Chief Strategist Steve Sosnick believes this combo of data should assuage recession risks while markets price in the Fed’s interest rate narrative for 2024.
Click here to watch the full episode of Yahoo Finance Live.
