US payrolls growth slowed in November while jobless rate fell

New York

US job growth registered its smallest gain this year while the unemployment rate fell by more than forecast to 4.2 per cent, offering a mixed picture that may nevertheless push the Federal Reserve to quicken the wind-down of pandemic stimulus.

Non-farm payrolls climbed 210,000 in November after upward revisions to each of the prior 2 months, a Labor Department report showed on Friday (Dec 3). The labour force participation rate edged up to 61.8 per cent.

The median estimate in a Bloomberg survey of economists called for a 550,000 payrolls gain and for the jobless rate to fall to 4.5 per cent. The US dollar turned lower and the Treasury yield curve steepened after the data reading. US stock index futures were still higher on the day.

The jobs report is composed of 2 surveys - one of employers and the other of households. The employer survey showed hiring slowed across industries, including declines at automakers and retail outlets. The household survey showed employment surged by 1.14 million people, and many came off the sidelines.

Job growth could be further restricted if the recent emergence of the Omicron variant of the coronavirus leads to new restrictions and keeps people from looking for work. Payrolls still remain 3.9 million below pre-pandemic levels.

While the headline number disappointed, the drop in the unemployment rate and the rise in labour force participation could help keep the Federal Reserve on track to possibly tighten policy faster than planned, as inflation proves more persistent previously thought.

The central bank's dual mandate requires that it weighs both price stability and maximum employment, and some policymakers fear that cutting off monetary support too soon could hurt the jobs recovery.

"We have to balance those 2 goals when they're in tension as they are right now," Fed Chair Jerome Powell told the House Financial Services Committee on Wednesday.

"I assure you we will use our tools to make sure this high inflation we're experiencing does not become entrenched."

Several economists said after the report that the Fed will still likely accelerate the speed of tapering when officials meet later this month.

Average hourly earnings rose 4.8 per cent in November from a year ago, though those figures are not adjusted for inflation. The average workweek rose to 34.8 hours in November, from 34.7 hours a month earlier.

The household survey showed those entering the labour force quickly found work.

Nearly 5 million people, the most since May of last year, went from out of the labour force to employed in November.

The unemployment rate for Black Americans fell by the most since October 2020, however that likely reflects a decline in labour force participation. The participation rate fell by 0.3 percentage point to the lowest since July.

For women aged 25 to 54, the participation rate rose to a pandemic high. That could signal childcare issues are abating. Still, it remains 1.3 percentage points below the pre-Covid high. BLOOMBERG