The agreements to close the historic strikes against the Big Three of the United States motor industry and the end of conflicts with Hollywood screenwriters and actors made it possible to boost employment in the world’s leading economy in the month of November. The number of non-agricultural jobs increased by 199,000 people, according to data released this Friday by the Bureau of Labor Statistics, With which the country has almost three years of strong dynamism in the labor market. The unemployment rate, which is measured by a household survey, fell to 3.7%.
The pace of job creation has been cooling in the second half of the year. The November figures are somewhat distorted by the end of the strikes, but without that effect they confirm the idea that the labor market has lost some strength while remaining robust. Job growth in November is lower than the average increase of 240,000 per month over the previous 12 months, but is in line with job growth in recent months. The end of the motor strike provided some 30,000 jobs in the month.
The figures are compatible with the soft landing that the Federal Reserve seeks for the United States economy, that is, a weakening of demand that allows inflation to be contained without falling into a full-blown recession. Unemployment has been below 4% for 22 months, the best streak in more than 60 years. The job creation figure for September has been revised downwards by 35,000 people, to 262,000, while that for October remains at 150,000, although in that last month it was weighed down by the loss of 32,000 jobs due to the motor strike.
The sectors that saw employment the most in November were health (77,000 people) and public administration (49,000), followed by industry (28,000), although in this case after the return of the striking workers. The film and sound recording industries created 17,000 jobs, primarily due to the resolution of strikes and labor disputes in the sector. Retail employment decreased by 38,000 people, half in department stores.
For this reason, the data will allow the Federal Reserve to maintain interest rates in the last meeting of the year, scheduled for Tuesday and Wednesday of next week. Although members of the central bank’s monetary policy committee still expected an additional rate hike of 0.25 percentage points in September, they have finally discarded that idea and the market expects the price of money to have peaked for the remainder of year and perhaps for the entire bullish cycle.
The decline in inflation itself increases real interest rates, so the market is beginning to bet more on when the first cut will arrive than on additional increases, despite warnings from Jerome Powell, president of the Federal Reserve. The apparent strength of the November employment data has made fewer investors bet on a first rate cut in March.
In November, the average hourly wage for nonfarm private sector employees increased 12 cents, or 0.4%, to $34.10. Over the past 12 months, the average hourly wage has increased 4%, down from 4.1% the previous month. This cooling is another good sign in the battle against inflation, but the pace of increase still seems higher than justified by productivity gains.
Labor market conditions appear to be normalizing and reaching a somewhat greater balance between supply and demand following post-pandemic rigidities. The difficulties that some companies have had when it comes to finding workers also mean that they are now thinking more about laying off employees in the face of weakening demand.
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