US: Unemployment rate falls in November, job growth slows

Nonfarm payrolls in the US were announced as 210K in November, lower than the expected 546K.

Nonfarm payrolls in the US were announced as 210K in November, lower than the expected 546K. Unemployment rate fell to 4.2%, better than 4.5% in market surveys. The labor force participation rate rose to 61.8%. The 2-month net revision for headline employment is at +82K. In the broad-based unemployment rate, the downward trend is preserved, moving from 8.5% to 7.8%. The number of unemployed decreased by 542K to 6.9 million. Both indicators have dropped significantly from their highs at the end of the February-April 2020 recession. However, they remain above their pre-coronavirus (COVID-19) pandemic levels (3.5 million and 5.7 million, respectively, in February 2020). Notable job gains have occurred in professional and commercial services, shipping and warehousing, construction and manufacturing. Retail trade employment declined during the month.


If we look at the sub-items; While an increase of 235K was observed against the expectation of 525K in the private sector, it showed an increasing trend on general employment. Professional and business services added 90K jobs in November. Employment in transport and warehousing increased by 50K in November to 210K above February 2020 levels. Construction employment increased by 31K in November after gains of similar size in the previous 2 months. Manufacturing added 31K jobs in November. Employment in financial activities continued to rise in November (+13K) and is 30K above February 2020 level. Retail employment decreased by 20K in November, job losses in general goods stores (-20K); clothing and clothing accessories stores (-18K); and sporting goods, hobby, book and music stores (-9K). Employment in the entertainment and hospitality sector changed little in November (+23K) after big gains at the start of the year. Healthcare employment was roughly unchanged in November (+2K).


Wages increased by 0.3%, one notch below the expectation of 0.4%, while annual wage growth was 4.8%. Average working time for all employees in the private sector increased by 0.1 hours to 34.8 hours in November. It is positive that full-time work is on the rise… On the other hand, the spread of wage growth across the floor reflects employers' efforts to attract workers to fill millions of job positions. The continued decline in the unemployment rate is good news, and the Fed will no longer be concerned about lower job gains. On the other hand, inflation pressure will intensify, as wages will increase even more in case of labor supply shortage. On December 15, the Fed may make a new decision on tapering speed, especially in the light of CPI, the high level of concerns indicates that it may change the pace of reducing asset purchases. Possibly, they may give time to monitor upside risks, but we think that asset purchases can be reduced more quickly at this rate of inflation.

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