November Payrolls Recover from October Strikes, Storms

Nonfarm payrolls increased by 227,000 in November, a sharp rise from the 12,000 reported in October, and slightly higher than the consensus of 214,000, according to Bureau of Labor Statistics data. The unemployment rate ticked up to 4.2% from 4.1%.

Average hourly earnings rose +0.4% on the month versus +0.3% consensus and +0.4% in October. Year-over-year, earnings rose 4% versus +3.9% expected and +4.0% in October, indicating that wage growth pressures remain. The labor force participation rate dipped to 62.5% versus 62.7% expected and 62.6% the prior month. The number of unemployed workers rose by 161,000, while the labor force shrank by 193,000.

September was revised up by 32,000 to +255,000, and the change for October was revised up by 24,000 to +36,000. With these revisions, employment in September and October combined is 56,000 higher than previously reported.

Job growth in November was helped by the end of disruptions from storms and strikes, which suppressed job growth in October.

The probability of a quarter-point rate cut by the Federal Reserve was 72.1% ahead of the data, but dipped to 70.3% following the report, according to the CME FedWatch Tool.

“This is going to be a close call but they’re [the Fed] likely to go with 25 basis points and then definitely be in wait and see mode,” Roger Ferguson, former Federal Reserve Vice Chairman, told CNBC.