The US added 227,000 jobs in November, setting up a possible Fed tapering by the end of the year.
227,000 jobs were added to the economy in November. (Stock )
In November there was an increase in the number of jobs than initially expected. Nonfarm payrolls rose by 227,000, and the unemployment rate rose slightly to 4.2%, the US Bureau of Labor Statistics reported. Health care, hospitality and government industries led the most in job growth.
“Although payroll employment increased in November with a gain of 227,000 jobs, and was revised up from the previous month by 56,000 jobs, the report shows more softness in the labor market,” Mike Fratantoni, MBA senior vice president and chief economist, said in response to the latest report.
“The household survey also showed a significant decrease in the number of people employed, and many families reported that there are people who are unemployed for a long time,” said Fratantoni.
Job growth numbers are strong, but even as unemployment is slowly changing, many Americans are still struggling to find work. The retail industry lost the most jobs in November, losing 28,000 jobs.
Compared to last year, the unemployment rate is still high at 4.2%. This time last year, the unemployment rate was 3.7%.
The health care sector had a good month in November, adding 54,000 jobs. The employment and leisure industries added the same number of jobs last month, 53,000. This is similar to the number of jobs the industry added in October.
Government employment also rose, adding 33,000 jobs in November, matching the average monthly gain of 41,000 seen over the past 12 months. Transportation and machinery manufacturing added 32,000 equivalent jobs, largely due to the return of Boeing workers who had been on strike in recent months.
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The Fed is likely to announce a rate cut in December
A stable job market and a rising unemployment rate have the potential to change any interest rate cuts that will be announced at the Federal Reserve’s December meeting.
“Fed officials have pointed to their ‘data bias’ when it comes to decisions about future rate cuts,” Fratantonie said. “These data support a cut at the December meeting. The MBA predicts that the Fed will continue to cut short-term rates through 2025, although it may slow the pace of cuts.”
The labor market has begun to stabilize, but remains stagnant, as indicated by the unemployment rate. Experts suspect that this will lead to a reduction in rates intended to help restart sectors of the economy. The results of the inflation report set to be released in mid-December will also influence the final decision on the part of the Fed.
After the December rate decision, 2025 looks bleak for further rate cuts. Many experts expect the rate of reduction to decrease.
“The balance of risks is shifting to less inflation next year,” said Oren Klachkin, a national financial market economist. “They’re going to be moving around a little bit in the dark, so we think they’re going to be moving a little bit.”
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Consumer sentiment rose for the fifth month in a row
Consumer sentiment is a mixed bag, but improved for the fifth month in a row, according to preliminary December numbers. Economic sentiment rose nearly 3%, the highest reading in seven months.
This month’s increase in sentiment is due to the belief that buying durable goods will help consumers avoid future price increases. Due to the current economic climate, sentiment may not last if prices continue to rise.
America’s political leanings influence their economic sentiments. The December report found that Democrats are seeing a decline in consumer sentiment while Republicans are seeing gains, and independents sit somewhere in between.
Democrats are generally worried about the potential economic effects of the upcoming tax hike. Many believe that the increase in taxes will lead to the return of inflation. Republicans believe the opposite and think that President-elect Trump will bring about a significant drop in inflation.
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