Nonfarm Payrolls Up 199K, US Unemployment Falls to 3.7%

Facts

• The latest jobs report from the US Labor Department, released on Friday, showed that nonfarm payrolls rose by a seasonally adjusted 199K in November, slightly exceeding the Dow Jones estimate of 190K and outpacing October’s gain of 150K.¹
• The data also showed the unemployment rate unexpectedly falling to 3.7%, while annual hourly wages increased 0.4% on a monthly rate. Both are well within historic ranges but unemployment rose by 0.2% compared to November last year when wage growth was at 5%.²
• November’s job growth was largely concentrated in healthcare, government, and leisure and hospitality, with gains in manufacturing reflecting the return of striking autoworkers. Meanwhile, September's job growth was revised down by 35K jobs to 262K.³
• Markets had a mixed reaction to the report as stock market futures trended slightly down while Treasury yields increased. The Fed is closely monitoring job data as it continues to seek to cool the economy and bring down inflation to its 2% target, aiming for a soft landing.⁴
• Job growth has been cooling to pre-pandemic norms despite gains, in line with the Fed’s plan. After 11 interest rate hikes since March 2022, the Fed has kept its benchmark rate steady at roughly 5.4% for two consecutive meetings — and it is expected to keep them unchanged when it meets next week.⁵
• Though Pres. Joe Biden and his Acting Labor Secretary Julie Su reacted to the report by claiming that it shows that “Bidenomics is working,” a recent CNN survey found that 71% of Americans view the current economic conditions as poor.⁶

Sources: ¹NBC, ²Forbes, ³FOX News, ⁴CNBC, ⁵Associated Press and ⁶CNN.

Narratives

• Democratic narrative, as provided by Yahoo finance. While it may seem like the pandemic ended a while ago, its economic impact was expected to continue for years to come. However, the Biden administration has made great progress in bringing the US economy back to normal in less than three years. Biden was dealt an unbelievably difficult hand, and policymakers have grappled with how to bring down inflation without bringing the economy to a standstill. Despite some bumps in the road, the US economy is finally starting to work as it should.
• Republican narrative, as provided by Townhall. At first, this November report may look positive, but as always, the devil lies in the details. Job growth still lagged behind the average monthly growth over the previous 12 months, with government jobs again supporting the upward trend that neutralized a loss in retail jobs just a month away from the busy Christmas and holiday shopping season. Small businesses and ordinary Americans are facing a difficult time under Bidenomics more than ever.
• Cynical narrative, as provided by Zerohedge. Just like all statistics, employment rates and job growth can be molded to fit different agendas, and November’s labor report is no different. While politicians look to score political points for better-than-expected job growth, they casually omit the fact that most of the high-wage growth came from unionized workers ending their strikes – meaning that no new jobs were actually created. The economy is still in a state of limbo, and we are definitely not in the clear when it comes to returning to normal.

Predictions