The Jobs Report – November 2022

Highlight

The economy added 263K jobs in November better than the consensus forecast of 200K job gain. Private payrolls accounted for 221K of the job gain, also better than the expectation of 185K. The prior two months were revised down by 23K.

What you need to know:

• Wage growth was 5.1% YoY, up from last month’s revised 4.9% gain. The reacceleration will likely be of concern to the Fed as a hot labor market with strong wage gains makes the job of reducing inflation more difficult.
• The job gains varied among sectors. Education and Leasure were the strongest sectors this month. Retail trades and Transportation both lost jobs in November.
• The household survey showed a loss of 138K jobs and a decline in the labor force. This kept the unemployment rate unchanged at 3.7%. The household survey has shown job losses in the past two months. This is at odds with the establishment report and bears watching as a sign of potential weakness in the establishment survey in the coming months.
• The trend in the establishment survey is weaker job growth over the fall. The three month average for both NFP and for private payrolls is declining.
• The headline growth in the jobs report is likely to give the bond bulls cause for concern. Optimism had grown recently that the Fed may soon slow down or cease hiking rates. This report is not as strong as the headline number implies but will likely not prevent the Fed from continuing to aggressively raise rates in the near term. Along with the recent weakness in the ISM readings, the report shows an economy that is responding to the rate increases of 2022 and may portend a less aggressive Fed in 2023.