U.S. Job Growth Continues to Exceed Expectations
Strong job growth and rising wages are creating new challenges for the Federal Reserve which has raised interest rates six times this year to curb inflation. While U.S. job growth eased in November, it remains strong by historical standards, registering well above pre-pandemic norms. In addition, the unemployment rate remains well below pre-pandemic norms.
Roughly 263,000 employees were added to payrolls in November 2022, according to the Bureau of Labor Statistics (BLS). That was a better result than the 200,000 jobs economists were projecting for the month. The number of jobs added in November was the smallest the nation has recorded since April 2021, which was the weakest since December 2020 when the number of jobs shrank. However, the recent job gains were still well above the average of around 190,000 jobs added each month from 2015 to 2019.
Downward revisions to September 2022 data showed 46,000 fewer jobs were added than previously reported, down to 269,000 jobs. The October 2022 job growth number was revised up by 23,000 jobs, to 284,000 jobs.
The U.S. economy has recovered all the net jobs lost during the COVID-19 pandemic. As of November, the nation had over 1 million more jobs (+0.7%) compared to the pre-pandemic employment level from February 2020.
Jobs by Industry
Most major employment sectors gained jobs in November.
The biggest job gains occurred in Leisure and Hospitality Services and Education and Health Services. Trade, Transportation and Utilities was the only major industry to record job losses during the month. Three of the top five job growth industries in November have yet to recoup all the jobs lost during the pandemic.
Most job sectors have recovered all the jobs lost during the COVID-19 pandemic downturn. Professional and Business Services has seen the best recovery, with today’s job count coming in nearly 1.1 million positions ahead of February 2020 numbers. Trade, Transportation and Utilities is also well ahead of pre-pandemic norms, with employment up by 880,000 jobs.
On the other hand, some of the harder-hit sectors remain below pre-pandemic job counts. Despite recent gains, employment in the Leisure and Hospitality Services sector is still well below its pre-pandemic employment count, by nearly 1 million workers. The Government sector is about 461,000 jobs behind February 2020 levels. Other job sectors yet to recover all jobs lost during the COVID-19 downturn are Other Services and Mining and Logging.
The unemployment rate (U3 or headline unemployment rate) in November was unchanged from October, remaining at 3.7%. The unemployment rate has been in a narrow range of 3.5% to 3.7% since March and has not fallen below 3% since 1953. At the onset of the pandemic, the unemployment rate climbed to 14.7% in April 2020. Prior to the pandemic, the unemployment rate ranged from 3.5% to 5.7% from 2015 to 2019, averaging 4.4% during that period.
The total number of unemployed in the U.S. increased to roughly 6 million in November.
The unemployment rate for adult men increased 10 bps from October to November, rising to 3.4%. The unemployment rate for adult women decreased 10 bps, falling to 3.3%. Meanwhile, the unemployment rate for teenagers increased, rising 30 bps from 11% in October to 11.3% in November.
Across 12 major industries, unadjusted unemployment rates increased in four and decreased in five. Unemployment decreased 120 bps in Information to 2.1%. Education and Health Services also recorded a notable downturn of 60 bps, with the November unemployment rate registering at 2.1%. On the other hand, the biggest increases were in Mining (up 230 bps to 3.1%) and Transportation and Utilities (up 90 bps to 4.2%). The other major industries recorded little or no movement in unemployment rates.
The highest industry unemployment rates (not seasonally adjusted) in November were in Leisure and Hospitality Services (5.8%), Transportation and Utilities (4.2%) and Construction (3.9%). The lowest unemployment rates were in the Government (1.9%) and Financial Activities (1.9%) sectors.
Average Hourly Earnings
Average hourly earnings among employees on private nonfarm payrolls rose by $0.18 from October to November. That monthly increase took average hourly earnings to $32.82 in November. On an annual basis, average hourly earnings were up $1.59, a 5.1% increase year-over-year. However, wages were outstripped by inflation, as the Consumer Price Index (CPI) rose 7.7% in the year-ending October.
Wage growth varied greatly by industry. Among major industries, Information workers led with average hourly wages jumping 8.7% year-over-year in November. Leisure and Hospitality Services employees enjoyed a 6.4% annual increase, followed closely by Trade, Transportation and Utilities jobs (6.3%). On the other hand, the smallest annual increase in hourly wages was seen among Other Services employees (2.8%).