December 6, 2019
The U.S. job market bounced back in November.
Nonfarm payrolls increased 266,000 last month, a 10-month high and well above consensus estimates for a 180,000 gain. September and October payrolls were also revised up by 41,000. Manufacturing payrolls climbed by 54,000 in November, but about 40,000 of that rise reflected workers returning from the General Motors strike.
Job creation has slowed somewhat this year as the economic expansion has matured. However, as shown in the LPL Chart of the Day, the pace of hiring is still noticeably above the expansion average, an impressive feat in the cycle’s 11th year.
Underlying details of the November jobs report were also encouraging. The unemployment rate fell to 3.5%, a fresh 50-year low. Average hourly earnings rose 3.1% year over year in November, a pace we think could buoy personal incomes without raising concerns about overheating the economy. The labor force participation rate remained near a six-year high, a sign of workers’ confidence in economic and job-market conditions.
“The job market continues to be resilient against global headwinds,” said LPL Financial Chief Investment Strategist John Lynch. “Hiring has continued at an above-average pace, and wages are still rising at a manageable clip, two dynamics that could continue to support solid consumer activity.”
Initial jobless claims, a leading indicator for economic health, have looked especially solid as well. Claims for unemployment benefits fell to 203,000 in the week ending November 30, a seven-month low. Jobless claims’ four-week average climbed to a six-month high in November, but we have yet to see the 75,000 to 100,000 pickup in claims that historically has occurred in advance of recessions.
We’re expecting payroll gains to moderate somewhat going forward, but we think slightly slower hiring could still be enough to support continuing economic growth and fend off recessionary fears. For more of our investment insights for the upcoming year, look for our Outlook 2020: Bringing Markets Into Focus.
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