November Jobs Report: Boring in the Right Ways

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 Lead Economist Daniel Zhao.

Another month, another jobs report on track for soft landing. Boring news is good news for the labor market and a welcome change from the beginning of the year when there were widespread concerns of a recession in 2023. Resilient jobs growth has helped beat back recession fears and unemployment was even a touch better in November, walking back some of the recession fears heading into today’s report. The job market is still doing its part to get us to a soft landing.

Payroll Growth Rebounds

Payroll employment grew by 199,000 in November, up from 150,000 in October. The modest rebound is likely in part due to the end of the UAW strike (motor vehicles and parts manufacturing payrolls grew 30,000 in November) and the Hollywood strikes (motion picture and sound recording industries grew 17,200). 

Retail trade lost 38,400 jobs on a seasonally adjusted basis as seasonal hiring was not as strong as past holiday seasons. Similarly, transportation & warehousing saw a smaller than expected seasonal gain in November, resulting in a small seasonally adjusted drop of 5,000 jobs.

Payroll gains continue to be driven in large part by health care & social assistance (+93,200), government (+49,000) and leisure & hospitality (+40,000), which have been major drivers of jobs growth over the course of 2023.

Unemployment Rate Backtracks

The unemployment rate dropped down to 3.7 percent in November from 3.9 percent in October. After rising  from 3.4 percent in April, the step down in November is an encouraging sign that the labor market may have walked back from the brink. Labor force participation also grew to 62.8 percent from 62.7 percent, a positive underlying context to the unemployment rate decline.

Wage Growth on a Downward Trend

Wage growth fell to 4.0 percent year-over-year in November, unchanged from 4.0 percent in October. While this is still higher than before the pandemic, wage growth is still clearly trending downwards as the labor market cools. In fact, in the last three months, average hourly earnings have grown at only 3.4 percent annualized, which is consistent with pre-pandemic wage growth rates that accompanied inflation near the Federal Reserve’s 2 percent target.

Conclusion

The job market remains on its orderly descent towards a soft landing. With steadily declining inflation, the risks now seem more tilted to the downside. The Federal Reserve now has to delicately set the economy down on the ground. The question now becomes when the Federal Reserve should ease the stance of monetary policy to manage that risk while keeping their credibility as tough on inflation.

More Insights

Payroll employment grew by 199,000 in November, rebounding from 150,000 in October.

The jump was in large part due to the end of the UAW/Hollywood strikes with motor vehicle and parts manufacturing growing by 30,000 and motion picture & sound recording growing by 17,200.

A longer term view of jobs growth by industry shows health care, government and education have really powered jobs growth in 2023. Leisure & hospitality has also been a strong contributor of jobs growth but at a slower rate than earlier in the recovery when the industry was still in "reopening" mode.

By contrast, professional & business services, information and finance have slowed in 2023 amid layoffs & hiring freezes.

Despite solid consumer spending, retail trade posted a 38,400 seasonally adjusted job loss in November, usually the peak of holiday employment. Transportation & warehousing also lost 5,000 jobs.

Some of this may be due to shifting seasonal patterns. November hiring in retail has been weaker the last few years compared to 2010–2019, perhaps as more holiday spending has shifted online post-Covid.

Average hourly earnings grew 4 percent year-over-year in November, unchanged from October, but still on a downward trend. On a 3-month annualized basis, wages have grown 3.4 percent which is consistent with levels seen pre-Covid when inflation was at the Fed's 2 percent target.

The unemployment rate fell to 3.7 percent in November, down from 3.9 percent in October, partially reversing some of the increases we've seen since the unemployment rate bottomed at at 3.4 percent in April 2023. The recent increase in the unemployment rate had been a point of concern as a usually reliable recession indicator, so the decline is a welcome relief.

Prime-age (25–54) labor force participation was flat at 83.3 percent in November and the prime-age employment-population ratio ticked up to 80.7 percent. Both are still below their recovery peaks, but at historically strong levels.