Strong US hiring muddies Fed’s fight versus inflation

Labor market adds 263K jobs with unemployment near a 53-year low in Nov.

WASHINGTON — The nation’s employers kept hiring briskly in November despite high inflation and a slow-growing economy — a sign of resilience in the face of the Federal Reserve’s aggressive interest rate hikes.

The economy added 263,000 jobs, while the unemployment rate stayed at 3.7%, still near a 53-year low, the Labor Department said Friday. November’s job growth dipped slightly from October’s 284,000 gain.

All year, as inflation has surged and the Fed has imposed higher borrowing rates, America’s labor market has defied skeptics, adding hundreds of thousands of jobs, month after month.

With not enough people available to fill jobs, businesses are having to offer higher pay to attract and keep workers. In November, average hourly pay jumped 5.1% compared with a year ago, a robust increase that is welcome news for workers but one that makes the Fed’s efforts to curb inflation potentially more difficult. On a month-to-month basis, wages jumped 0.6% in November, breaking a streak of smaller gains that had suggested that pay growth might be cooling.

The report painted a picture of a job market in which the supply of available workers is falling just when many companies are still desperate to hire to meet customer demand. The proportion of Americans who either have a job or are looking for one declined for a second straight month, to 62.1%. Before the pandemic, that figure was 63.4%; the drop since then translates into about 3 million people.

Since the pandemic, many older workers have taken early retirement. In addition, several hundred thousand working-age people have died from COVID-19. And many families have struggled to find or afford child care, leaving some adults unable to return to work.

This week, Fed Chair Jerome Powell stressed in a speech that jobs and wages were growing too fast for the central bank to quickly slow inflation. The Fed has jacked up its benchmark rate, from near zero in March to nearly 4%, to try to wrestle inflation back toward its 2% annual target.

Nationally, there were some signs of weakness in Friday’s hiring figures: Retailers, transportation and warehousing companies all cut jobs. So did temporary staffing agencies. Temp employment, often seen as a leading indicator of hiring, has declined for three straight months.

As a result, more than half the job growth last month — 170,000 — came from just two large industries: education and health care, and a category made up mostly of restaurants, hotels and entertainment firms. Both sectors are still replacing workers who were lost during the pandemic. Most other industries have surpassed their prepandemic levels of employment.

Yet a category that includes technology workers actually added jobs, despite many recent high-profile layoff announcements from such tech companies as Amazon, Meta, Twitter and the real estate broker Redfin.