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Total nonfarm payroll employment increased by 263,000 in November, in line with the level of job growth in both September (263,000) and October (261,000), according to the latest jobs report from the Bureau of Labor Statistics (BLS). Monthly job growth has averaged 392,000 in 2022, compared with 562,000 jobs added per month in 2021.

"Jobs came in above expectations, but growth slowed across several industries as the weight of rate hikes continues to seep into the economy," says Zonda chief economist Ali Wolf. "The gains were headlined by strong performance in leisure and hospitality, a sector that is still lower than pre-pandemic levels, but tech layoffs pulled professional and business services to near neutral."

Job gains in November were concentrated in the service-providing sectors, with leisure and hospitality (+88,000 jobs) and education and health services (+82,000 jobs) recording the largest gains. The retail trade sector lost 30,000 jobs in November, the third consecutive month of decline, signaling a potential slowdown in consumption.

The unemployment rate in November was unchanged from the previous month at 3.7%, and the count of unemployed individuals was also relatively unchanged at 6 million. The unemployment rate has oscillated between a narrow range of 3.5% and 3.7% since March 2022.

Despite a “better-than-expected report,” Mortgage Bankers Association senior vice president and chief economist Mike Fratantoni says the association still forecasts a recession in the U.S. in the first half of 2023.

“While the payroll survey showed a slower pace of growth, the household survey again showed an outright decline in employment—with a drop of 138,000 in November,” says Fratantoni. “With other data showing declines in job openings and increases in announced layoffs, we do expect further weakening ahead, with the unemployment rate likely to reach 5.5% by the end of 2023.”

Among the unemployed, the number of permanent job losers rose by 127,000 to 1.4 million in November, while the number of long-term unemployed—those jobless for 27 weeks or more—was little changed at 1.2 million in November. The long-term unemployed accounted for 20.6% of all unemployed individuals.

The labor force participation rate and the employment-population ratio were relatively unchanged from the previous month in November at 62.1% and 59.9%, respectively. Both measures are 1.3 percentage points below their pre-pandemic February 2020 levels and have largely remained unchanged since the beginning of the calendar year.

“Wages grew by 0.6% in November and have grown 5.1% year over year, another strong reading and a further indicator that the labor market is likely contributing to inflationary pressures,” says Doug Duncan, chief economist at Fannie Mae.

The number of persons not in the labor force who currently want a job was little changed at 5.6 million in November and remains above its February 2020 level of 5 million. The number of persons marginally attached to the labor force—individuals who want and are able to work and have looked for a job in the prior 12 months but had not looked for work in the four weeks preceding the Household Data survey—held stable at 1.5 million. The number of discouraged workers, a subset of the marginally attached who believed no jobs were available for them, was approximately 405,000 in November.

Residential construction employment, including specialty trade contractors, grew by 3,900 in November, an acceleration from the pace of growth in October. However, Duncan says more growth will be needed to help home builders fulfill their existing orders. Fratantoni says a weakening job market will eventually be “a negative” for the housing market, reducing demand. However, Fratantoni says the Federal Reserve reaching its goal of reducing inflation “will be a benefit to those still in a position to buy a home, as it will bring down mortgage rates and improve affordability.”

“Today’s report shows that recent monetary tightening has, to this point, had minimal impact on labor markets,” Duncan says. “The strong wage growth in particular leads us to believe the Federal Reserve will not soon deviate from their expected course of additional tightening.”