November saw a robust rebound in U.S. job creation, with nonfarm payrolls increasing by 227,000, exceeding market estimates of 200,000.
This marked a significant recovery from October’s upwardly revised figure of 36,000, which had been hampered by the effects of Hurricane Milton and a major Boeing labour strike.
September's payrolls were also revised upward, reaching 255,000.
The unemployment rate inched higher to 4.2%, aligning with expectations. This increase coincided with a decline in the labour force participation rate, which dipped to 62.5%. Broader unemployment measures, including discouraged and underemployed workers, also rose slightly to 7.8%.
Sectoral gains were led by healthcare, adding 54,000 jobs, leisure and hospitality, contributing 53,000 jobs, and government, up 33,000 jobs, while retail trade saw a decline of 28,000 jobs amid delayed holiday hiring. Social assistance contributed an additional 19,000 jobs to the overall total.
Wage growth remained strong, with average hourly earnings rising by 0.4% month-over-month and 4% year-over-year, surpassing forecasts by 0.1 percentage point in both cases.
The labour data has bolstered expectations for a Federal Reserve rate cut in December. Market-implied odds of a quarter-point reduction have climbed above 88%, according to trading data.
Despite the strong payroll growth, the household survey painted a contrasting picture. Household employment fell by 355,000, with part-time workers decreasing by 268,000 and full-time workers dropping by 111,000.
Fed Chair Jerome Powell, speaking earlier in the week, noted that the Federal Reserve remains patient in its approach, citing the overall strength of the economy. However, he highlighted that rate cuts would depend on forthcoming economic data.
Inflation, though below its 2022 peak, has shown signs of drifting higher in recent months. Paired with the mixed signals from the labour market, the Fed's decision on December 18 will be closely watched.
