The Monthly Employment Situation released this morning by the Bureau of Labor Statistics showed an addition of 263,000 jobs in November. The unemployment rate remained unchanged at 3.7%. Economists projected a much weaker report in hopes that efforts by the Fed to curb inflation and equalize the economy were finally starting to take effect.
Since the Covid-19 Pandemic caused nearly a full shutdown of the American economy and unemployment rose to a high of 14.7% in April 2020, the labor market has been rebounding with intensity. 2021 was a free-for-all hiring frenzy, driving wages up and creating more job opportunities as employers embraced hybrid/remote positions. This expansion has continued beyond the labor market returning to pre-pandemic levels, which occurred in July 2022. Since then, job growth has continued its upward spiral and shows no signs of letting up.
The Federal Reserve raised interest rates for a fourth time last month – an effort to curb the record high inflation – but the labor market appears to be unaffected in its prevailing strength. Economists fear that more aggressive rate hikes could overshoot the target and lead to a hard landing into a long-expected recession. Nela Richardson, Chief Economist, ADP said, “…our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains.” According to the ADP National Employment Report, released Wednesday, private employers added 127,000 jobs in November, which is 112,000 less than last month. The BLS data suggests otherwise, with monthly job growth throughout 2022 averaging 392,000.
Consumer confidence has been a hot topic in recent weeks ahead of the holiday season, which accounts for 20-25% of annual sales. According to the Consumer Confidence Survey, released by The Conference Board this past Tuesday, the index decreased from 102.2 in October to 100.2, the lowest since July. Similarly, the Expectations Index, which is a measure of the short-term outlook for consumers, decreased from 77.9 in October to 75.4, a reading below 80 indicates an elevated possibility of a recession. Gas prices are on the rise again and food prices aren’t far behind; both are likely culprits for weakening consumer confidence. Despite the economic uncertainty, retailers reported record online revenue from Black Friday sales, which surpassed $9.1 billion. Holiday sales are well under way and the 2022 season is projection to surpass last year despite the low consumer index.
Leisure and hospitality added 88,000 jobs in October, with food services and drinking places increasing by 62,000 jobs. Health care added 45,000 jobs, government added 42,000, and employment in other services added 24,000. Within the other services sector personal and laundry services added 11,000 jobs in November. Social assistance gained 23,000, and construction gained 20,000. The construction sector has reported an average increase of 19,000 jobs per month in 2022. Average hourly earnings rose by 18 cents for all employees on private, nonfarm payrolls.
