US Job Growth Slows in November, but Wage Gains Fuel Inflation Worries
Private Sector Adds Fewer Jobs Than Expected, Upping Pressure on Fed
The U.S. private sector added 146,000 jobs in November, falling short of economists’ expectations, but wage growth accelerated, raising concerns about persistent inflation.
The ADP/Stanford Lab survey released Wednesday showed October’s job growth was revised down sharply to 184,000 from the initially reported 233,000. Analysts had predicted the economy to add 163,000 private-sector jobs.
“Even though overall growth for the month was healthy, performance was mixed across sectors,” said Nela Richardson, chief economist at ADP, in a press release. “The manufacturing sector was the weakest we have seen since the spring” with 26,000 jobs lost, she noted, naming “financial services, leisure and hospitality” among the other sectors with weaker performance.
She added that job gains remained strong in education and health services, as well as construction.
Wages Rise, Putting Pressure on the Fed
Related: United States: Inflation Fell in September to 2.1% Year-Over-Year
The figures also show a rebound in wage growth, for the first time in 25 months. “Wages are the bridge between the labor market and inflation, And what we saw this month, for the first time in two years, was an increase in wages, of 4.8% (…) compared to 4.7%,” Nela Richardson underscored on CNBC. “It seems small, but this recovery means we are stabilizing at a higher rate of wage growth than before the pandemic,” she added. Richardson believes this level of wage growth is incompatible with the Federal Reserve’s target of 2% inflation.
October Thru November: A Tale of Two Months
These data points come as official monthly
job figures are expected on Friday. October’s numbers were severely impacted by two devastating hurricanes and a strike at Boeing. Workers on strike and those out of work due to natural disasters are counted as unemployed in the U.S.
Analysts expect a significant increase in November job creation, with 214,000 new jobs projected (combining the public and private sectors). This contrasts sharply with October, which saw only 12,000 new jobs added.
There are also predictions of a slight increase in the unemployment rate to 4.2% from 4.1% in October. However, some economists predict a “rebound”. One Federal Reserve governor pointed out, “The strike is over and it is likely that most of the jobs destroyed by the hurricane have been recreated,
October’s job dilemma highlights the volatility of the labor market and adds to the complex considerations facing the Federal Reserve as it tries to juggle strong employment figures with concerns over rising inflation.
Q: What are the current trends in job growth and wage increases in the US?
## US Job Market: A Balancing Act
**(Interviewer):** Joining us today is [Guest Name], an economist specializing in labour market trends.
Thanks for being here.
**(Guest):** It’s my pleasure to be here.
**(Interviewer):** The latest ADP employment report paints a somewhat mixed picture of the US job market. Job growth slowed in November, but wages continue to rise. Could you shed some light on what this means?
**(Guest):** Absolutely. The US economy added 146,000 private-sector jobs in November, which is lower than economists anticipated. This does suggest a slight cooling in the labour market.
However, it’s important to remember this growth is still positive. The report also highlighted significant wage growth, which is good news for workers but raises concerns about inflation.
**(Interviewer):**
Nela Richardson, chief economist at ADP, mentioned mixed performance across sectors.
**Can you elaborate on that?**
**(Guest):** Yes, the report showed some sectors are stronger than others. While we saw growth in education, health services, and construction, manufacturing experienced job losses, the largest decline since spring. Financial services, leisure and hospitality also saw weaker performance.
**(Interviewer):** The Federal Reserve has been actively trying to curb inflation. How do you think this report will factor into their decision-making?
**(Guest):** This report presents a difficult scenario for the Fed.
While slower job growth might be seen as a positive sign in their fight against inflation, the accelerating wage growth could indicate that previous interest rate hikes haven’t yet fully dampened wage pressures.
It will be a delicate balancing act for the Fed as they weigh these factors in their upcoming meetings.
**(Interviewer):** looking forward, what are your projections for the US job market in the coming months?
**(Guest):** Predicting the future is never easy, but based on current trends, I anticipate continued, albeit slower, job growth.
The tight labour market and continued demand for workers will likely support wage increases, but this could eventually lead to the Fed taking a more aggressive stance on interest rates.
It will be important to monitor inflation data closely in the coming months to get a clearer picture of the economic outlook.
**(Interviewer):** Thank you for sharing your insights. We appreciate your time.
**(Guest):** My pleasure.
