Key takeaways
In November, the U.S. economy added more than 200,000 jobs, bouncing back from a relatively flat report in October.
The biggest gains were in healthcare, adding 54,000 new jobs in November.
The unemployment rate ticked slightly higher, to 4.2%, though still below 2024’s peak levels.
The strength of the U.S. labor market continues to fuel economic expansion. According to the November jobs report, the U.S. economy created 227,000 new jobs. This follows the prior month’s report, which initially indicated only 12,000 new jobs created in October, though that number was revised to 36,000. October’s numbers were affected, in part, by the impact of severe hurricanes and of a worker’s strike at Boeing and other companies. November’s job numbers are more in line with September’s, when the economy created 255,000 new jobs. November’s job report represents 2024’s fourth best month for job growth.1
The month’s biggest job gains came in the healthcare industry, adding 54,000 positions, slightly below this year’s 59,000 monthly average.1 “Healthcare is an area where we’re chronically understaffed,” says Tom Hainlin, senior investment strategist, U.S. Bank Asset Management. “It is an industry with more than one million job openings, so there is more opportunity for continued growth, but employers can’t find enough workers.”
Other major contributors to November’s job gains included leisure and hospitality (+53,000 jobs in November), government employment (+33,000) and transportation equipment manufacturing (+32,000) which reflected Boeing workers returning to work after ending their strike.
November’s job creation numbers provide an encouraging sign of continued economic expansion. Despite October’s tepid job growth, the three-month average through November is comparable to the year-to-date monthly average.2
“Markets generally have little concern with revisions of past job growth numbers,” says Rob Haworth, senior investment strategy director for U.S. Bank Asset Management. “That data is not market-moving because it is so far in the rearview mirror. Markets are more concerned with the direction the economy is headed.”
While job growth remains steady, the nation’s unemployment rate ticked slightly higher, to 4.2%, in November.1 Still it remains below July’s 2024 peak of 4.3%. “When taking a more historical view of the unemployment rate, a number in the low 4% range is quite favorable,” says Haworth.
The unemployment rate stayed below 4% for more than two years, but then in May 2024, it crossed the 4% threshold.2
The number of open positions compared to available workers, which previously was significantly imbalanced with far more jobs than workers, recently leveled off. At the end of October, according to the U.S. Bureau of Labor Statistics, there were 7.7 million job openings in the U.S., compared to 7.1 million unemployed persons.3
The weekly new jobless claims report is closely watched by economists to help forecast potential labor market trends. Initial jobless claims stood at 224,000 for the week ending November 30, 2024. It’s down from a 2024 high of 260,000 jobless claims, reported in early October.4 “If you look at long-term history, sub-300,000 initial weekly jobless claims is considered a fairly healthy level for the economy,” says Haworth.
“When taking a more historical view of the unemployment rate, a number in the low 4% range is quite favorable,” says Rob Haworth, senior investment strategy director for U.S. Bank Asset Management.
Markets also track the labor force participation rate, considered a key barometer of the broader economy's health. This number hasn’t changed much over the past year, and in November, dropped slightly to, 62.5%, below its level the prior four months.1 “Improving labor participation is one way to address tightness in the labor market that’s propping up wage gains,” says Matt Schoeppner, a senior economist at U.S. Bank.
According to the November jobs report, average hourly earnings increased 4% over the past year, a number that over the past two years has held steady.1 Notably, wage gains, on average have exceeded the inflation rate, as measured by the Consumer Price Index, which currently stands at 2.6% for the past 12 months (ending in October).2
The Federal Reserve (Fed) recently adjusted its interest rate policy. Prior to September 2024, the Fed’s primary focus was to slow economic growth and lower inflation. After raising rates from near 0% to 5.50%, and then, for more than a year, maintaining rates at that level, the Fed in September 2024 implemented a 0.50% rate cut, followed by another 0.25% cut in November, with further cuts expected. At the time rate cuts began, the Fed indicated that labor market weakness was an increasing focus of its monetary policy. However, in recent comments, Fed Chair Jerome Powell stated, “The U.S. economy is in very good shape – the downside risks appear to be less in the labor market, growth is definitely stronger than we thought, and inflation has come in a little higher.”5
While this seemed to indicate the Fed could slow the pace of anticipated interest rate cuts, Eric Freedman, chief investment officer for U.S. Bank Asset Management, says, “We still think the bias is for the Fed and other global central banks to keep lowering interest rates.”
Investors continue to closely track jobs data as an important economic indicator and a potential signal about Fed monetary policy. Fed rate cuts are considered a way to boost the economy, help support the stock market rally that began in 2023, and also benefit the bond market.
Talk with a wealth professional if you have questions about your personal financial circumstances or investment portfolio.
The job market refers to the marketplace where individuals seek work and employers seek workers. The strength of the job market is considered one important measure of the current health of the broader economy. If more jobs are being created and demand for labor is high, it tends to reaffirm the presence of an expanding economy. By contrast, higher unemployment levels and low job growth (or a decline in job growth) indicate a slowing economy.
The unemployment rate, reported monthly by the U.S. Bureau of Labor Statistics, provides significant insight into the health of the nation’s economy. Generally, the lower the unemployment rate, the stronger the economy is likely to be. The unemployment rate is also one of the mostly closely followed indicators. It’s important to note that the unemployment rate reflects people who are out of work but still seeking employment. It does not reflect others who have stopped looking for work or consider themselves no longer in the labor force.
When the unemployment rate moves higher, it indicates potential weakening of the economy. Consumers may consider holding back on purchases if they have concerns that they, themselves, could face unemployment soon. If that occurs, it can potentially contribute to further economic weakness. When unemployment is low, it’s a good indicator that the economy is strong and expanding.
By easing monetary policy with interest rate cuts, does the Federal Reserve view the threat of recession as receding?
With inflation retreating and more interest rate cuts likely, how should investors position their portfolios to capitalize on potential opportunities, while guarding against risks?
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