The U.S. job market exceeded expectations, with a significant contribution from Hollywood and auto industry workers who ended their strikes and resumed work. The Labor Department in its recently released report, US Labour Bureau Statistics, November 2023, reported that 199,000 jobs were added in November, leading to a decrease in the unemployment rate to 3.7%, the lowest since July, despite an increase in workforce participation. Reduction of 215,000 unemployed individuals. This brings the total number of employed Americans to a robust 161.969 million. Interestingly, this decrease in unemployment is a slight deviation from the near two-year high observed in October.
These monthly reports by the Labour Bureau are closely monitored as the U.S. central bank strives to moderate the economy and stabilize prices. Investors are increasingly confident in the Federal Reserve’s measures, which include the highest interest rate hikes in over two decades. Some speculate that the Fed might start to reverse its course next year.
While the latest data is encouraging for job seekers, analysts predict ongoing debates about the central bank’s future actions.
How the household survey is conducted for employment stats?
The household and establishment surveys provide employment estimates based on sample data, each with its own set of strengths and weaknesses. The establishment survey, with its larger sample size, has a smaller margin of error when measuring month-to-month employment changes. A change of approximately 130,000 jobs over a month is deemed statistically significant in this survey.
In contrast, the household survey requires a much larger change of about 600,000 to be statistically significant due to its smaller sample size. However, it encompasses a wider range of workers, including self-employed individuals with unincorporated businesses, unpaid family workers, agricultural workers, and private household workers, who are not included in the establishment survey. It also provides employment estimates for various demographic groups, making it a useful tool for analyzing employment trends among different population segments.
Has U.S created Jobs for every community?
In November, the U.S. unemployment rate slightly decreased to 3.7%, with the total number of unemployed individuals remaining steady at 6.3 million. This change was observed across various worker groups, with the unemployment rate for teenagers decreasing slightly to 11.4%. The rates for adult men (3.7%), adult women (3.1%), Whites (3.3%), Blacks (5.8%), Asians (3.5%), and Hispanics (4.6%) remained relatively stable.
5.3 Million people were excluded from the Report’s Survey
In November, the number of individuals not in the labor force but wanting a job was 5.3 million, relatively unchanged from the previous month. These individuals were not counted as unemployed as they were not actively looking for work in the 4 weeks preceding the survey or were unavailable to take a job. Among these, the number of persons marginally attached to the labor force remained steady at 1.6 million.
These individuals 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 421,000 in November, essentially unchanged from the previous month.
Nov followed by stagnant Oct
The decline in job openings in October was particularly noticeable in healthcare and social assistance, with a decrease of 236,000; finance, which includes banking, insurance, and real estate and has been severely impacted by higher interest rates, down by 168,000; and hotels, restaurants, and bars, down by 124,000.
They have consistently exceeded 8 million for 32 consecutive months, a level that had not been reached before 2021.
Factors responsible for declining rates
The combination of decreasing inflation and strong hiring has led to optimism that the Federal Reserve (Fed) can achieve a “soft landing”. This involves raising interest rates just enough to slow down the economy and control price increases, without triggering a recession. The cooling job market could result in less inflationary pressure and reduce the need for the Fed to keep interest rates high.
the Federal Reserve raising its benchmark interest rate 11 times since March 2022 to tackle the worst inflation in 40 years, the job market has shown remarkable resilience. The increased borrowing costs have helped curb inflation, with consumer prices in October increasing by 3.2% from the previous year, down from a peak of 9.1% in June 2022.
Views of Different economists on the Report
Richard Flynn, the Managing Director at Charles Schwab UK, pointed out that recent economic indicators suggest a potential slowdown in the labor market. However, the current data may delay expectations of an early rate cut by the Fed.
Bloomberg Economics noted that the rise in initial jobless claims in late November was tempered by seasonal factors related to the Thanksgiving holiday. As we transition into the new year, it is expected that companies facing slower growth will likely resort to layoffs rather than attrition to manage their workforce, particularly in consumer-facing industries.
Rubeela Farooqi, the Chief U.S. economist at High-Frequency Economics, stated that the reduction in job openings would be good news for policymakers at the Fed. She noted that while the labor market is still strong, it is showing signs of cooling, and both wages and inflation are slowing down. The data supports the view that interest rates have peaked, and the Fed’s next move will likely be a rate cut in the second quarter of 2024.
In October, U.S. employers posted 8.7 million job vacancies, the lowest number since March 2021, indicating a slowdown in hiring due to increased interest rates, but the pace remains fairly robust.
Conclusion
U.S Labour Bureau Statistics report shows that the unemployment rate has fallen since July. Moreover, the unemployment rate has stayed below 4% for an uninterrupted 21 months, marking the longest such period since the 1960s.