US Added 263k Jobs in November with a Robust Rise in Hourly Earnings

US Nonfarm Payrolls in October rose 263,000 rose higher than the expected 200,000 after the prior increase of 284,000. Average Hourly Earnings rose a robust 0.6% month-over-month, (consensus 0.3%) after October’s 0.4% increase, leaving them up 5.1% year-over-year. The Average Workweek was 34.4 (consensus 34.5) after the prior 34.5. Wage gains were higher, but companies are cutting hours. Job gains were led by Leisure and hospitality adding +88k and Education and health adding +82k jobs.

Private payroll company ADP reported that US jobs grew just 127,000 private payrolls in November (consensus 200,000). The Unemployment Rate in October was 3.7% (consensus 3.6%) versus the prior 3.7% reading as the labor force participation rate fell to 62.2% from 62.3%.

Working

November 2022 US Employment Report

The jobless rate was 3.7% in November the Labor Department reported Friday. The unemployment rate is back towards the February 2020 pre-pandemic rate of 3.5%, which was a 50-year low.

US Jobs Report

November 2022 US Employment Report and Expectations

Highlights

Employment

  • Change In Nonfarm Payrolls Nov: 263K (est 200K; prevR 284K)
  • Unemployment Rate Nov: 3.7% (est 3.7%; prev 3.7%)
  • US Labour Force Participation Rate Nov: 62.1% (est 62.3; prev 62.2%)
  • Prior two-month net revision 23,000 lower than previously reported. The change in total nonfarm payroll employment for September was revised down by 46,000, from +315,000 to +269,000, and the change for October was revised up by 23,000, from +261,000 to +284,000.
United States Unemployment Rate

The unemployment rate and number of unemployed persons prior to the coronavirus (COVID-19) pandemic was 3.5 percent and 5.7 million, respectively, in February 2020). That leaves the economy down by 1.2 million jobs, or 0.8 percent, from its pre-pandemic level in February 2020.

United States Non Farm Payrolls
United States Non-Farm Payrolls
  • Change In Private Payrolls Nov: 221K (est 185K; prevR 248K)
  • Change In Manufacturing Payrolls Nov: 14K (est 18K; prevR 36K)
  • Change in Government Payrolls Nov +42K (prev +28k)
  • Household survey -186K vs -306K prior
  • U6 Underemployment Rate Nov: 6.7% (prev 6.8%)
  • Long-term unemployed at 1.1m vs (prev 1.1m, 1.2m pre-pandemic)
  • The long-term unemployed accounted for 19.5 percent of all unemployed persons.
  • The employment-population ratio 60.0% vs (prev 60.1%, 61.2% before pandemic)

Earnings

  • Average Hourly Earnings (M/M) Nov: 0.6% (est 0.3%; prevR 0.5%)
  • Average Hourly Earnings (Y/Y) Nov: 5.1% (est 4.6%; prevR 5.6%)
  • Average Weekly Hours All Employees Nov: 34.4 (est 34.5; prev 34.5)

Wage gains (blue) higher, But companies cutting hours (orange)

@LizAnnSonders

The market had expected the November report released Friday to show nonfarm payrolls rose 200k new jobs.  November continues the drop from an average of 439K in the first eight months of the year, as higher interest rates and prices started to weigh on the economy. Private payroll company ADP reported that US jobs grew just 127,000 private payrolls in November (consensus 200,000).

A severe labor shortage has driven up annual wage increases above 5% every month of this year. By contrast, wage gains averaged 3.2% in the 12 months to February 2020. Wage growth rose last month. Average hourly earnings rose by 0.6% in November from a month earlier. They were up 5.1% from a year earlier.

Employers hired across industries. Companies in certain industries that are vulnerable to interest-rate increases, such as technology and real estate, have announced layoffs. Some firms have implemented hiring freezes.

The labor force participation rate, which measures the share of the population working or looking for work fell to 62.1% in November from 62.2% in October. More workers joining the labor force could help sustain job growth in the coming months. Participation is down from 63.4% in February 2020.

Labor force participation rate continues to dip, down to 62.1% in November vs. 62.3% est. & 62.2% prior @LizAnnSonders

Total nonfarm employment has increased by around 22.0 million since hitting a trough in April 2020 and has returned to the pre-pandemic level. The number of unemployed persons rose by 48 thousand to 6.01 million in November, while the number of employed decreased by 138 thousand to 158.5 million. Since February 2020, government employment is down by 461 thousand, or 2.0 percent.

Number of individuals unemployed for >27 weeks (“long-term unemployment”) ticking higher

Market Reaction

The report itself being good news for the economy is seen as bad news for bond and stock markets, thinking it will push out any eventual pivot on rates by the Fed with its monetary policy. The report says higher for longer with respect to the target range for the fed funds rate.

  • The terminal Fed funds top has moved up to 4.97% from 4.90% yesterday.
  • Treasury yields higher immediately following the release. The 2-yr note yield, at 4.16% prior to 4.36% now. The 10-yr note yield, at 3.50% now 3.60% now. 
  • The U.S. Dollar Index rose sharply on the heels of the employment report. It was at 104.48 just before the release but 105.28 now. USD/JPY was trading at 134.06 just before the data and shot to 135.83 
DXY Reacts to Dec Jobs
  • The Nasdaq fell 2.8% in broadening equity wreckage after non-farm payrolls highlighting the sensitive to economic data. The jobs report wasn’t much more than a touch strong, and stocks were wrecked on fear of more Fed hikes. The robust hourly wages spiking the bubble. Weekly gains from 5% to just 1.7%.

WSJ Fedwatcher Nick Timiraos on the jobs report:

The strong November jobs report keeps the Federal Reserve on track to raise interest rates by a half percentage point at its meeting in two weeks and underscores the risk that officials will raise rates above 5% in the first half of next year.

Where the Jobs Were:

Job gains were widespread. In September, 5.2 percent of employed persons teleworked because of the coronavirus pandemic, down from 6.5 percent in the prior month. In May 2020, the first month these data were collected, 35.4 percent of employed persons teleworked because of the coronavirus pandemic. These data refer to employed persons who teleworked or worked at home for pay at some point in the 4 weeks preceding the survey specifically because of the pandemic.

Largest gains occurring (prior month) in:

  • Leisure/hospitality +88k (+60k)
  • Education/health +82k (+80k)
  • Gov’t +42k (+36k)
  • Goods-producing +37k (+47k)
  • Construction +20k (+9k)
  • Manufacturing +14k (+36k)
  • Financial +14k (+13k)
  • Temporary help -17k (-6k)
  • Retail -30k (-3k)
  • Trade/transport -49k (+4k)

Employment in manufacturing increased by 14 thousand in November of 2022, below market expectations of a 20 thousand gain. In October, employment in manufacturing rose 36 thousand. Job growth has averaged 34,000 per month thus far this year, the 2021 average was 30,000 per month.

 

Other November Employment Reports


Household Survey Data  

The unemployment rate was unchanged at 3.7 percent in November and has been in a narrow range of
3.5 percent to 3.7 percent since March. The number of unemployed persons was essentially unchanged
at 6.0 million in November.

Among the major worker groups, the unemployment rates for adult men (3.4 percent), adult women
(3.3 percent), teenagers (11.3 percent), Whites (3.2 percent), Blacks (5.7 percent), Asians (2.7 percent),
and Hispanics (3.9 percent) showed little or no change over the month.

Among the unemployed, the number of permanent job losers rose by 127,000 to 1.4 million in
November. The number of persons on temporary layoff changed little at 803,000.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.2
million in November. The long-term unemployed accounted for 20.6 percent of all unemployed persons.

Both the labor force participation rate, at 62.1 percent, and the employment-population ratio, at 59.9
percent, were little changed in November and have shown little net change since early this year. These
measures are each 1.3 percentage points below their values in February 2020, prior to the coronavirus
(COVID-19) pandemic.

The number of persons employed part time for economic reasons was about unchanged at 3.7 million
in November. These individuals, who would have preferred full-time employment, were working part
time because their hours had been reduced or they were unable to find full-time jobs.

The number of persons not in the labor force who currently want a job was little changed at 5.6
million in November and remains above its February 2020 level of 5.0 million. These individuals were
not counted as unemployed because they were not actively looking for work during the 4 weeks
preceding the survey or were unavailable to take a job.

Among those not in the labor force who wanted a job, the number of persons marginally attached to
the labor force held at 1.5 million in November. These individuals wanted and were available for work
and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks
preceding the survey. The number of discouraged workers, a subset of the marginally attached who
believed that no jobs were available for them, was 405,000 in November, little changed from the
previous month.


Establishment Survey Data

Total nonfarm payroll employment increased by 263,000 in November, roughly in line with average
growth over the prior 3 months (+282,000). Monthly job growth has averaged 392,000 thus far in 2022,
compared with 562,000 per month in 2021. In November, notable job gains occurred in leisure and
hospitality, health care, and government. Employment declined in retail trade and in transportation and
warehousing.

Private Jobs

United States Nonfarm Payrolls - Private

Leisure and hospitality added 88,000 jobs in November, including a gain of 62,000 in food services
and drinking places. Leisure and hospitality has added an average of 82,000 jobs per month thus far this
year, less than half the average gain of 196,000 jobs per month in 2021. Employment in leisure and
hospitality is below its pre-pandemic February 2020 level by 980,000, or 5.8 percent.

In November, employment in health care rose by 45,000, with gains in ambulatory health care services
(+23,000), hospitals (+11,000), and nursing and residential care facilities (+10,000). So far in 2022,
health care employment has increased by an average of 47,000 per month, well above the 2021 average
monthly gain of 9,000.

Government Jobs 

Government added 42,000 jobs in November, mostly in local government (+32,000). Government
employment has increased by an average of 25,000 per month thus far this year, compared with 38,000
per month in 2021. Since February 2020, government employment is down by 461,000, or 2.0 percent.

United States Government Payrolls


In November, employment in the other services industry rose by 24,000, as personal and laundry
services added 11,000 jobs over the month. Other services employment has increased by an average of
15,000 per month thus far this year, compared with 24,000 per month in 2021. Employment in other
services is below its February 2020 level by 186,000, or 3.1 percent.

Employment in social assistance increased by 23,000 in November and has returned to its February
2020 level. Within social assistance, employment in individual and family services increased by 17,000
in November. Job growth in social assistance has averaged 18,000 per month thus far in 2022, compared
with an average of 13,000 per month in 2021.

Construction employment continued to trend up in November (+20,000), with nonresidential building
adding 8,000 jobs. Construction has added an average of 19,000 jobs per month thus far this year, little
different from the 2021 average of 16,000 per month.

Employment in information rose by 19,000 in November. Employment in the industry has increased by
an average of 14,000 per month thus far this year, in line with the average of 16,000 per month in 2021.

Manufacturing Jobs

Manufacturing employment continued to trend up in November (+14,000). Job growth has averaged
34,000 per month thus far this year, little different from the 2021 average of 30,000 per month.

United States Manufacturing Payrolls

In November, employment in financial activities continued its upward trend (+14,000). Job gains in
real estate and rental and leasing (+13,000) and in securities, commodity contracts, and investments
(+6,000) were partially offset by a decline in credit intermediation and related activities (-9,000).
Employment in financial activities has increased by an average of 12,000 per month thus far this year,
the same as in 2021.

Employment in retail trade declined by 30,000 in November. Job losses in general merchandise stores
(-32,000), electronics and appliance stores (-4,000), and furniture and home furnishings stores (-3,000)
were partially offset by a job gain in motor vehicle and parts dealers (+10,000). Retail trade employment
has fallen by 62,000 since August.

Employment in transportation and warehousing declined by 15,000 in November and has decreased
by 38,000 since July. In November, job losses in warehousing and storage (-13,000) and in couriers and
messengers (-12,000) were partially offset by a job gain in air transportation (+4,000).

Employment in professional and business services changed little in November (+6,000). Within the
industry, professional and technical services added 28,000 jobs, while business support services lost
11,000 jobs. Monthly job growth in professional and business services has averaged 58,000 thus far in
2022, down from 94,000 per month in 2021.

Employment showed little change over the month in mining and wholesale trade.

Earnings

In November, average hourly earnings for all employees on private nonfarm payrolls rose by 18 cents,
or 0.6 percent, to $32.82. Over the past 12 months, average hourly earnings have increased by 5.1 percent. In November, average hourly earnings of private-sector production and nonsupervisory
employees rose by 19 cents, or 0.7 percent, to $28.10.

 Wages Monthly

United States Average Hourly Earnings MoM

Wages Yearly

United States Average Hourly Earnings YoY

In November, the average workweek for all employees on private nonfarm payrolls declined by 0.1
hour to 34.4 hours. In manufacturing, the average workweek for all employees decreased by 0.2 hour to
40.2 hours, and overtime declined by 0.1 hour to 3.1 hours. The average workweek for production and
nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.9 hours.

 Hours

United States Average Weekly Hours

The change in total nonfarm payroll employment for September was revised down by 46,000, from
+315,000 to +269,000, and the change for October was revised up by 23,000, from +261,000 to
+284,000. With these revisions, employment gains in September and October combined were 23,000
lower than previously reported. (Monthly revisions result from additional reports received from
businesses and government agencies since the last published estimates and from the recalculation of
seasonal factors.)


The Employment Situation for December is scheduled to be released on Friday, January 6, 2023,
at 8:30 a.m. (ET).


Source: AFP, Challenger, DOL, TradersCommunity Data, BLS

From The TradersCommunity News Desk