US job growth surged in November after being severely constrained by hurricanes and strikes, but this probably does not signal a material shift in labour market conditions that continue to ease steadily and allows the Federal Reserve to cut interest rates again this month.
US non-farm payrolls increased by 227,000 jobs last month after rising an upwardly revised 36,000 in October, the Labor Department said in its closely watched employment report today.
Economists polled by Reuters had forecast payrolls accelerating by 200,000 jobs last month following a previously reported 12,000 rise in October.
Estimates ranged from 155,000-275,000 jobs.
Economists have suggested averaging October and November payrolls gains to get a clearer trend of job growth. The labour market reeled in October from Hurricanes Helene and Milton as well as a big strike at Boeing factories in the West Coast.
The initial October payrolls count had been also likely curtailed by a shorter collection period of responses to the survey of establishments from which payrolls are derived.
The initial response rate for the establishment survey was 47.4%, the lowest since January 1991 and well below the 69.2% average for October in the past five years.
The collection period for the responses was only 10 days, on the lower end of the normal 10-16 days. Other labour market indicators, including first time applications for state unemployment benefits, are consistent with a healthy but slowing labour market.
The unemployment rate climbed to 4.2% after holding at 4.1% for two months in a row. Average hourly earnings increased 0.4% after gaining 0.4% in October. In the 12 months to November, wages advanced 4% after rising 4.0% in October.
Financial markets earlier today were seeing a roughly 72% chance of a 25 basis points rate cut at the US Federal Reserve's December 17-18 policy meeting, CME's FedWatch tool showed.
The Fed has lowered interest rates by 75 basis points since September, when it launched its easing cycle. Its policy rate is now in the 4.5%-4.75% range, having been hiked by 5.25 percentage points between March 2022 and July 2023.
With the economy continuing to expand at a healthy pace, inflation stuck above the central bank's 2% target and policy uncertainty from President-elect Donald Trump's incoming administration, the outlook for further rate cuts in 2025 is unclear.
Business sentiment perked up in the aftermath of Trump's victory on hopes of fewer regulations. But his promises to raise tariffs on imports and carry out mass deportations have raised concerns of higher prices and disruptions to the labor market.
Traders are betting on another two rate cuts next year, with a better than even chance of a third rate by the end of 2025.
