The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor Senior Economist Daniel Zhao.
The job market is sending mixed signals for the second month in a row with strong payroll gains but weak labor force participation. Today’s jobs report from the U.S. Bureau of Labor Statistics shows the job market slowing with job gains falling to 263,000 in November from 284,000 in October. The unemployment rate also was unchanged at 3.7 percent, but the labor force participation ticked down another tenth of a percentage point. As 2022 comes to a close, the job market has been more resilient than expected in the face of headwinds, but the November report shows that we are starting to get mixed economic signals.
Payroll Employment Growth Slows Again
Payroll employment grew by 263,000 in November, decelerating from 284,000 in October. While job gains have decelerated since the summer, they still remain above pre-pandemic levels. In 2019, job gains averaged 164,000 a month. Payroll gains have been solidly above expectations for much of 2022, despite recessionary concerns.
Leisure & hospitality (+88,000 jobs added) led job gains in November. Job gains were also high in health care & social assistance (+68,100), where job openings have held near record highs for all of 2022. Even as tech layoffs dominated headlines in November, the impact is yet to be seen in today’s jobs report as the information sector added 19,000 jobs. However, as the holiday shopping season got off to a modest start, retail (-29,900) and transportation & warehousing (-15,100) both saw significant seasonally-adjusted job losses.
Weak Household Survey Undercuts Strong Payroll Growth
The unemployment rate was unchanged in November, holding at 3.7 percent. The unemployment rate remains extremely low by historical standards, up only slightly from the 3.5 percent expansion low, but further increases would be a canary in the coal mine.
However, the labor force participation rate fell to 62.2 percent, its second straight decline of a tenth of a percentage point. The establishment and household surveys have diverged in October and November, as a reminder that the economic tea leaves are often hardest to read when the economy is at a turning point.
Wage Growth Jumps
Average hourly earnings increased 5.1 percent year-over-year in November, jumping up from 4.9 percent in October. Wage growth increased more than expected in November specifically with the month-over-month change at 0.6 percent (or 6.8 percent annualized). As the Federal Reserve looks for signs of inflationary pressures easing, the jump in wage growth is a speed bump in the Fed’s path toward a soft landing.
Today’s jobs report gives a sense of deja vu. Like October’s report, it shows a weaker household survey with falling labor force participation, but a strong establishment survey with better-than-expected payroll growth. 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. 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.
Payroll gains were stronger-than-expected, rising 263,000 in November, even though they did slow to their lowest level since mid-2021.
Job gains continue to be led by services with leisure & hospitality (+88,000) and education & health services (+82,000) leading the way. Interestingly, information still added 19,000 jobs despite prominent reports of tech layoffs.
Holiday hiring is off to an anemic start in 2022. Retail lost 29,900 jobs in November. On a non-seasonally adjusted basis, you can see retail hiring has been much lower so far this holiday season compared to any year in the 2010s. Transportation & warehousing is in a similar boat, losing 15,100 jobs on a seasonally adjusted basis despite the holiday season.
Wage growth did tick up in November, rising to 5.1 percent year-over-year. Looking at the shorter term data (month-over-month & 3-month annualized), you can see November was a sharp uptick, though it’s hard to see that as sustainable given other indicators of a cooling market.
The unemployment rate was flat in November, holding at 3.7 percent, but labor force participation ticked down 0.1 percentage points for the second straight month.
Prime-age labor force participation also ticked down and this measure has been more consistently falling since the summer.
Unemployment rates ticked down but labor force participation also weakened for most racial/ethnic groups.
Black labor force participation did outperform, rising to its highest level since the summer after softness for much of the fall.
Employee absences due to illness ticked up to 1.6 million in November, the highest since the Omicron surge in January 2022, likely as many Americans are getting sick with the current wave of Covid-19, flu and RSV circulating.