The US added 263000 non farm jobs in November, and the pressure of the Federal Reserve to continue to raise interest rates intensified

Although the Federal Reserve actively raised interest rates and tried to slow down inflation and the labor market, the US employment growth in November was still far higher than expected.



The data released by the Labor Department on Friday showed that the number of non farm payrolls in the United States increased by 263000 in November, compared with 284000 before the revision; The unemployment rate remained unchanged at 3.7% due to the decline in the labor participation rate.



Economists surveyed by Dow Jones previously estimated that 200000 new non farm jobs were created in the month, with an unemployment rate of 3.7%.



The above data may not change the pace of the Federal Reserve, which has been steadily raising interest rates this year. The inflation level close to the 40 year high triggered the fastest round of interest rate increase by the Federal Reserve since the early 1980s. The current target range of the federal funds rate is 3.75% - 4%, the highest level since 2008.



Another blow to the Federal Reserve's anti inflation efforts is that the average hourly wage in the United States rose 0.6% month on month in November, twice what economists expected; It rose 5.1% year on year, much higher than the expectation of 4.6%.



In addition, the labor participation rate fell 0.1 percentage points to 62.1% in November, hitting the lowest level again this year.



Seema Shah, chief global strategist of Principal Asset Management, said that even after 375 basis points of interest rate increase, the United States still added more than 260000 jobs, which is no joke. The labor market is very hot, increasing the pressure on the Federal Reserve to continue to raise interest rates.



Specifically, leisure and hotel industries saw the largest growth, with 88000 jobs added; Health care and government departments added 45000 and 42000 jobs respectively. The service industry, including personal services and dry cleaning, added 24000 jobs.



In addition, the construction industry added 20000 jobs, and the information industry and manufacturing industry added 19000 and 14000 jobs respectively.



At the same time, the retail industry lost 30000 jobs, and the transportation and storage industries lost 15000 jobs, although the busy holiday shopping season is coming.



The Federal Reserve has raised interest rates six times this year, including 75 basis points for four consecutive times. Nevertheless, this year's employment growth has been strong, but slightly lower than the level in 2021.



So far this year, the US has added an average of 392000 jobs every month, 562000 in 2021 and 164000 in 2019 before the epidemic. The labor market continues to be in short supply, with 1.7 jobs for each job seeker.



This means that despite the uncertain economic outlook and rising recession fears, employers are still seeking recruitment. Low unemployment and wage growth help stimulate consumer spending, which is the main engine of the U.S. economy.



Brian Coulton, chief economist of Fitch Ratings, said that the Federal Reserve was tightening monetary policy, but some people forgot to tell the labor market. The latest data show that the US economy recovered steadily in the second half of the year, but it did not help alleviate the imbalance between labor supply and demand that the Federal Reserve was worried about.



Federal Reserve Chairman Powell said in a speech in Washington on Wednesday that employment growth is too fast and wage pressure is driving up inflation. "It needs to be clear that strong wage growth is a good thing, but to make wage growth sustainable, it needs to be consistent with 2% inflation," Powell said.



The Federal Reserve will hold a policy meeting on December 13-14. This is the last employment report before the meeting. The market expects that the Federal Reserve will raise the federal funds rate by 50 basis points at the meeting. Judging from the current market pricing and the speech of central bank officials, the Federal Reserve may raise interest rates several times in 2023.



However, there are also data indicating that labor demand has cooled. In recent weeks, the number of job vacancies has decreased, and the number of people who continue to apply for unemployment benefits has steadily risen to the highest level since February. A survey in November showed that only 18% of small business owners planned to recruit in the next few months, the lowest proportion since the beginning of 2021.