Jobs market strengthens in November, defying forecasts

investmentnews.com:

The U.S. labor market unexpectedly strengthened in November with pickups in employment and wages, deflating hopes for the Federal Reserve to cut interest rates early next year.

Nonfarm payrolls increased 199,000 last month following a 150,000 advance in October, a Bureau of Labor Statistics report showed Friday. The return of striking auto workers helped boost the count by 30,000. The unemployment rate fell to 3.7% and workforce participation edged up. Monthly wage growth rose more than forecast. 

Health care, leisure and hospitality, and government hiring, in addition to the pickup in manufacturing upon the resolution of the United Auto Workers strike, drove the payrolls gain. Other categories, such as retail, showed tepid growth or outright declines.

The acceleration in payrolls is at odds with recent reports that have depicted a softer hiring pace, an outcome favored by the Fed as it will help rein in demand and tame price pressures.

A separate report Friday showed consumers’ feelings about the economy improved markedly in early December, with a gauge of sentiment from the University of Michigan climbing to a four-month high and topping all forecasts. They also pared back short-run inflation expectations to the lowest level since 2021, and longer-term expectations also receded.

The surprise strength supports policymakers’ desire to keep borrowing costs elevated to ensure inflation returns to target.

Fed officials are widely expected to keep borrowing costs at the highest level in two decades when they meet next week. Chair Jerome Powell has repeatedly pushed back against growing bets of rate cuts early next year, stressing that policymakers will move cautiously but retain the option to hike again. Treasury yields rose