US employers added a surprisingly strong 199,000 jobs last month, a signal that the economy’s momentum has continued despite the Federal Reserve’s rate-hiking campaign.
November’s payroll gain was above the 180,000 jobs economists expected were added, according to Refinitiv data, which also predicted that the jobless rate would hold steady at 3.9%.
However, the unemployment rate edged down to 3.7% — a sign that the economy could skirt a recession in favor of a so-called “soft landing.”
Fresh data released by the Bureau of Labor Statistics on Friday also noted that wages were up 4% compared to a year ago, to $34.10.
Payroll gains in October were not revised, while September’s figure was revised down by 35,000.
Lower hiring stints combined with higher-than-expected unemployment historically signals a recession, Bloomberg economists Anna Wong and Stuart Paul noted.
“It’s harder for job seekers to find work, and longer stints of unemployment usually lead to persistent increases in the unemployment rate,” Wong and Paul told the outlet.
“Our view is that a recession likely began in October,” they added — when the US economy added just 150,000 jobs and joblessness rose to 3.9%, slightly above the 3.8% rate that held steady in August and September, which had ticked higher from 3.5% in July.
Federal Reserve officials have said that they’re no longer forecasting a recession, though JPMorgan CEO Jamie Dimon and a panel of top economists at the National Association for Business Economics have said otherwise.
On the heels of Dimon warning Wall Street of a “dangerous and inflationary” economy, NABE released its latest Outlook Survey, which showed that its closely-watched economists foresee stubbornly-high inflation, a rise in unemployment and a 50% chance of recession.
A slew of headwinds will slow the current quarter’s Gross Domestic Product — a comprehensive measure of economic activity and performance — to a pace of 1.2%, NABE reported, before dipping to a grim 1% in 2024.
The figure marks a stark slowdown from the 5.2% annualized GDP rate during the third quarter.
On the heels of the dismal data, of the 30-plus economists surveyed, one in four said they’re now forecasting a recession, assigning a probability of at least 50%, NABE reported.
November’s job report will serve as a key data point at the next Federal Open Market Committee’s Dec. 12 and Dec. 13 meeting, when central bankers are set to decide whether or not to implement another 25 basis-point interest rate hike.
However, last month’s payroll gains lower the chance of a rate cut, despite the fact that borrowing money hasn’t been this expensive in over two decades.
Strong hiring can often fuel inflation if companies feel compelled to raise pay to attract and keep workers, making it more difficult for the Fed to bring inflation down without pushing the benchmark federal funds rate beyond its current 22-year high.
“This unexpected surge in employment not only outpaces prior estimates but also continues to prove that the labor market has been a key driver in the nation’s overall economic health,” said RedBalloon CEO Andrew Crapuchettes.
Interest rates are currently sitting between 5.25% and 5.5%. Last month, Fed officials unanimously decided to hold the record-high rate steady for the second time in six policy meetings so far this year.
Meanwhile, stubbornly-high inflation has yet to reach the Fed’s 2% target, though October’s Consumer Price Index — which tracks changes in the costs of everyday goods and services — came in at 3.2%, slightly lower than expected.
The rate marked a deceleration from the September’s 3.7% advance
The Bureau of Labor Statistics is set to release November’s CPI during day one of the FOMC meeting, on Dec. 12.
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