"Amid concerns of a recession, it is encouraging to see this strong jobs report", said Steve Rick, chief economist at CUNA Mutual Group

263,000 Jobs Added in November, Dashing Expectations, While October Revised Sharply Higher

The labor market is becoming more balanced between supply and demand.
By Tim Smart

|Dec. 2, 2022, at 9:06 a.m.

Jobs Gains Dash Expectations

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“Notable job gains occurred in leisure and hospitality, health care, and government,” the Labor Department report said. “Employment declined in retail trade and in transportation and warehousing.”

“Notable job gains occurred in leisure and hospitality, health care, and government,” the report said. “Employment declined in retail trade and in transportation and warehousing.”

Wages rose by 0.6% for the month, well above the 0.3% expected, and 5.1% on an annual basis.

“Amid concerns of a recession, it is encouraging to see this strong jobs report follow a more robust third-quarter GDP growth rate,” said Steve Rick, chief economist at CUNA Mutual Group. “We expect unemployment to remain below the natural rate of 4.5% this year. Still, we will continue to pay particular attention to the labor force participation rates, as they play a critical role in today’s inflation battle.”

Markets dived on the news, with futures on the Dow Jones Industrial Average dropping by 400 points before steadying somewhat.

The report will do little to change the Federal Reserve’s campaign of raising interest rates to curb inflation. The central bank is having some success as prices for some goods and overall inflation have receded somewhat in the past couple of months. But the job market has continued to show more resiliency than the Fed would like.

Fed Chairman Jerome Powell warned Wednesday policy makers are far from done and they would “stay the course,” although he acknowledged the Fed may reduce the amount of its next rate hike in two weeks, likely to 50 basis points instead of its recent 0.75 hikes.

The Fed is hoping for a “just right” ' scenario of “a softening pace of job growth that is still robust enough to help ward off recession,” said Elizabeth Crofoot, senior economist at labor market data firm Lightcast.

But most analysts do not foresee a massive wave of layoffs, even should a recession develop next year.

“While we expect the unemployment rate will rise in 2023 to a 4.5-5% range considering our base case of a global recession, the lack of labor supply growth over the next three years (0.5% vs 3% historical average) will dampen the magnitude of unemployment increases,” Vanguard’s economists and investment strategy group said Thursday.

While some brand-name tech stocks like Meta, Twitter, Amazon and others have issued layoff notices, there has not yet been a broad-based trend of layoffs across corporate America. On Wednesday, the government said there were 10.3 million jobs open as of the end of October. That equates to 1.7 jobs for every available worker, a level that is high by historical levels.

“Despite shaky numbers and headlines about a recession, the job market has remained durable overall,” says James Neave, head of data science at job search firm Adzuna.