Solid US Hiring Lowers Unemployment Rate in Latest Sign of a Still-Sturdy Job Market

Solid US Hiring Lowers Unemployment

Solid US Hiring Lowers Unemployment, WASHINGTON (AP) — The U.S. Employers in the United States added a healthy 199,000 jobs last month, and the unemployment rate decreased, providing new evidence that the economy could achieve the elusive “soft landing,” in which inflation returns to the Federal Reserve’s 2% target without precipitating a severe recession.

Solid US Hiring Lowers Unemployment Rate in Latest Sign

Solid US Hiring Lowers UnemploymentAccording to the Labour Department’s data released on Friday, the jobless rate fell from 3.9% to 3.7%, remaining just above a five-decade low of 3.4% in April. For nearly two years, the unemployment rate has been below 4%, the longest such streak since the late 1960s.

The return of around 40,000 formerly striking auto workers and actors, who were not at work in October but were back on the job in November, boosted last month’s job increase.

The most recent jobs report and other recent data show an economy and labour market that, while still strong, are reverting to pre-pandemic levels. Businesses are hiring, but they are not in a rush to fill a large number of positions. More Americans have returned to the labour force, and immigration has increased this year.

As a result, firms are finding it easier to hire, with fewer concerns about labour shortages and less temptation to raise pay quickly, which can fuel inflation.

“What we wanted was a strong but moderating labour market, and that’s what we saw in the November report,” said Navy Federal Credit Union economist Robert Frick.

A cooling employment market is exactly what the Fed hoped to achieve with its quick interest rate hikes over the last year and a half as it aimed to slow the economy and inflation. Hiring has averaged slightly more than 200,000 every month over the last three months, down from around 320,000 in the same period last year.

Furthermore, the majority of last month’s job growth was concentrated in just a few industries. In November, the healthcare business – doctors’ offices and hospitals — created 93,000 jobs.

Hotels and restaurants created 40,000 jobs, while the government added 49,000, accounting for nearly all job growth. Retailers, shipping and warehousing industries, and temporary help agencies, on the other hand, all slashed positions.

Nonetheless, last month’s employment increase increased the proportion of Americans working to 60.5%, the highest level since the epidemic began, but it is still lower than the pre-COVID level of 61.1%.

Meanwhile, earnings are increasing at a slower but still substantial rate. The average hourly wage increased 4% year on year in November, mirroring the previous month’s result, which was the lowest since June 2021. Nonetheless, average income is currently growing faster than inflation, which should help consumer spending.

According to official data, layoffs have remained modest, despite job cuts at companies such as Panera Bread, a food chain, and Spotify, a music streaming platform, which cited increased borrowing rates as the reason it had to reduce approximately 1,500 jobs globally.

According to Becky Frankiewicz, president of staffing firm Manpower Group North America, more employers are relocating people from one division to another rather than firing them off. Many businesses remember how tough it was to recruit workers during the pandemic and want to keep their employees.

“Everything we see continues to point to a slow glide into a cooler labour market,” she went on to say.

Aaron Seyedian, the owner of a small cleaning firm in Takoma Park, Maryland, says his company is still expanding and recruiting. He has enough work to expand his 30-person staff by five people.

“Well-Paid Maids,” Seyedian’s company, has recently boosted its starting salary from $23 to $24 per hour. He stated that he has had no issue recruiting qualified candidates.

“From my perspective,” Seyedian told reporters, “the economy is still strong, and people still want to spend money.”

The Fed’s decision to hold interest rates unchanged for the third time in a row when it meets next week is unlikely to be affected by Friday’s jobs report. Since March 2022, the central bank has raised its benchmark rate 11 times, from near zero to around 5.4%.

Mortgages, vehicle loans, credit cards, and company borrowing have all become significantly more expensive as a result.

Most economists and Wall Street traders believe the Fed will lower rates next, though the strength of Friday’s jobs report may cause the central bank to retain rates at their current levels for a longer length of time.

According to the CME FedWatch tool, Wall Street traders predicted that the Fed would lower rates at its March meeting 55% of the time before the jobs report. They now expect the first cut in May.

Guy Berger, a former lead economist at the job-search website LinkedIn, believes the labour market’s resiliency means the Fed can keep interest rates high to combat inflation without fear of causing a recession.

“If we’re not cooling, what’s the rush?” Berger stated that rates must be reduced.

A lot of the most recent economic data points to a possible soft landing. Companies are posting fewer job openings, and Americans are changing occupations less frequently than they were a year ago, both of which tend to dampen wage growth and inflation pressures.

Most analysts predict that growth will stall and inflation will continue to fall. The economy is forecast to grow at a 1.5% annual rate in the final three months of this year, slowing from a blistering 5.2% rate in the July-September quarter. Cooler growth should help to reduce inflation while allowing for a modest rate of hiring.

Inflation has dropped from 9.1% in June 2022 to 3.2% last month. And, according to a different inflation measure preferred by the Fed, prices climbed at a 2.5% annual rate in the previous six months, which is not far beyond the central bank’s 2% target.

Christopher Waller, a key Fed official who normally favours higher rates, boosted market expectations for rate hikes this week when he suggested that if inflation continued to fall, the Fed may cut rates as soon as spring.

Fed Chair Jerome Powell, on the other hand, pushed back against such predictions last Friday, saying it was “premature to conclude” that the Fed had raised its benchmark rate sufficiently to combat inflation. And it was too early to “speculate” about when the Fed might drop rates, he added.

However, Powell also stated that interest rates are “well into” a restrictive zone, implying that they are stifling growth. Many observers interpreted the remark as a hint that the Fed is done raising interest rates.

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