Job growth surged in November, an expected rebound after hurricanes and striking workers heavily distorted the October data.
However, looking past the pendulum swing of recent months, the US labor market remains stable — but cooling — and still hasn’t shaken the cause for concern that a greater weakening may be at hand.
“It is a little bit of a mixed bag,” Cory Stahle, economist at Indeed, told CNN. “Right now, the momentum does seem to be in a positive direction, by and large.”
The US economy added 227,000 jobs last month, as striking and weather-waylaid employees went back to work and bolstered a steady stream of employment gains, according to Bureau of Labor Statistics data released Friday.
Economists were anticipating 200,000 jobs were added and a jobless rate remaining at 4.1%, according to consensus estimates on FactSet.
November’s report was expected to be a palate cleanser after October was muddied by temporary job losses due to back-to-back hurricanes as well as a large labor strike at Boeing.
October’s initial report showed a meek 12,000 total jobs added. Although that was revised higher (as anticipated) to a net gain of 36,000 in the November report, it nonetheless marked the lowest monthly increase since December 2020. As such, November saw an outsized boost from those workers returning to the job.
However, the unemployment rate ticked up last month to 4.2% from 4.1%, and a growing number of jobless Americans are taking longer to find a job — a reflection of a pullback in hiring. People are staying unemployed, on average, for 23.7 weeks (more than five months), the highest duration since April 2022, according to data released Friday.
“The labor market is healthy even though it is, in the long term, trending in an unhealthy direction,” Noah Yosif, chief economist for the American Staffing Association, told CNN in an interview Friday. “What we’re seeing is really a K-shaped duality of outcomes for the labor market: It’s good if you have a job, but it’s very, very difficult if you don’t have a job.”
Solid gains, but also a reason for another rate cut
The health care, government and leisure and hospitality industries drove the lion’s share of last month’s job gains — as they have done for much of the past year — however, overall job growth was slightly more broad-based than in recent months.
Manufacturing saw one of its highest gains in months, at 26,000 jobs; however, much of that can be attributed to the striking Boeing machinists returning to work.
The retail industry posted loss of 28,000 jobs for the month, which at first glance seems shocking because of the ongoing holiday season; however, the November report is likely a reflection of Thanksgiving and Black Friday falling at the tail end of the month as well as seasonal adjustment factors, Elise Gould, senior economist at the Economic Policy Institute, told CNN.
Wage growth was stronger than expected at 0.4% for the month, holding at a 4% increase annually.
Strong pay gains appear to be a holdout while other Covid-era distortions fade, Elyse Ausenbaugh, head of investment strategy at JPMorgan Wealth Management, wrote in commentary issued Friday.
“But I’m keen to note two things: First, that the gains could continue to help consumer wallets and confidence adapt to the higher price levels brought on by recent years’ inflation pressures,” she wrote. “Second, that it doesn’t need to shift the Fed’s focus on recalibrating their policy stance.”
Through November, the US economy has added an average of 180,363 jobs per month (September’s job gains were also revised higher, by 32,000, to a new total of 255,000 jobs).
The year-to-date monthly average is considerably cooler growth than what was seen during the post-pandemic rebound; however, the current monthly average is right in line with what was seen during 2010 to 2019 (which included the longest period of job expansion on record).
And this current labor market is also becoming historic: With November’s gains, the US has added jobs for 47 consecutive months, making it the third-longest period of employment expansion on record.
Records aside, the health of the labor market — and to what extent this cooldown is an outright weakening — remains a critical factor for the US economy as well as the Federal Reserve’s future course of monetary policy.
Layoff activity has remained mild, but unemployment has been ratcheting higher. In fact, this is the first time since 2021 that the unemployment rate has been above 4% for six consecutive months.
The demand-driven softness exhibited in the unemployment rate “significantly increases the odds that the Fed cuts in December,” Stephanie Roth, chief economist at Wolfe Research, told CNN Friday.
What rate cuts, Trump policy could mean for the labor market
The labor market is entering 2025 on solid footing and with enough resilience to still make a “soft landing,” Stahle said, referencing the relatively rare achievement of the Fed reining in high inflation while not triggering a recession.
Where it goes from here, however, remains a question mark. There are factors that could spur it to rev back up, stall out or even crash, economists say.
“When you start to see hiring and new opportunities in the labor market decline, there comes a point where those declines start to snowball, and that can be really detrimental to the economy,” said Yosif, of the American Staffing Association.
One key, potentially counteracting influence is already under way: After keeping interest rates at a 23-year high for more than a year, the Fed slashed its benchmark rate by a half-point in September and another quarter-point in November.
“Monetary policy takes about three to six months in order to fully permeate the labor market as well as the cost that employers see when they think about bringing on new headcount,” “I think that we are in a good position to start seeing some growth based on the Fed’s election to front-load rate cuts.”
However, even if the Fed does reduce rates further when it meets this month, one full point of cuts will not be enough, Yosif added.
“Employers are definitely going to want additional confirmation that rate cuts are coming down in a sustainable manner before they really start to make long-term decisions in posting new opportunities as well as hiring for those opportunities,” he said.
However, that decision calculus could very well be affected by other elements outside of the endogenous, economic sphere.
In 2025, former President Donald Trump returns to the White House and has promised to implement sweeping policy changes — specifically, massive tariff hikes on the US’ largest trading partners and massive deportations of undocumented immigrants — starting as soon as he takes office next month.
Additionally, members of Trump’s team have pledged drastic cuts to federal spending, which could result in large-scale layoffs.
“We know the labor market doesn’t exist in a vacuum,” said EPI’s Gould. “Policymakers have a role to play in keeping the economy strong. I think what we’ve seen is measured rate cuts, and I think we will continue to see that.”
She added: “It’s yet to be seen what policymakers coming in are going to do that could impact the labor market; but it is a quite strong labor market that the transition is walking into.”
CNN’s Matt Egan contributed to this report
