America’s job engine has again defied jittery stock traders, bearish forecasters and blue-ribbon economists to deliver eye-catching gains and power an exceptionally resilient economy.
November’s reassuring employment report, released Friday by the Labor Department, featured payroll increases of 266,000 and offered a counterpoint to recent anxieties about an escalating trade war and weakening global economy.
“I think that this report is a real blockbuster,” said Daniel Zhao, senior economist at the career site Glassdoor. “Payrolls smashed expectations.”
At 3.5%, November was the 21st consecutive month with an unemployment rate of 4% or lower. Revisions to earlier estimates brought the average monthly payroll gain for the past three months to 205,000, a substantial achievement for the 11th year of an economic expansion.
The hearty performance presented President Donald Trump with something to showcase during a week when he fielded criticism for fueling trade tensions with Argentina, Brazil, China and European allies. Abroad, foreign leaders were caught on camera taking gibes at the president, while at home, congressional Democrats pressed ahead with plans that could result in an impeachment vote before the end of the year.
At the moment, many Americans are more focused on expanding payrolls and fatter paychecks, and in that respect, Trump has delivered. “It’s the economy, stupid,” he wrote on Twitter just before the report’s release.
After the release, he returned to Twitter to celebrate the results.
The report’s dazzle was shadowed by a couple of weak patches. The return of tens of thousands of striking General Motors workers turbocharged the manufacturing numbers. But that closely watched sector remained anemic.
“Manufacturing is still flat after you pull out the returning strike numbers,” Zhao said. “It’s still suffering from headwinds from the trade war, but at least it’s not worsening.”
The 7-cent increase in average hourly wages last month was also disappointing, considering that the jobless rate is at a half-century low. Wages were up 3.1% from a year earlier.
However modest the pay increase, it has given Americans the confidence to keep buying, which is crucial in an economy where consumer spending accounts for 70% of the gross domestic product.
Among businesses, worries about the economy seemed to peak this summer. Since then, there have been signs that slowdown fears are easing, said Joe Galvin, chief research officer of Vistage, an association of small-business owners and executives.
Roughly 60% of the 654 employers surveyed in November by Vistage said they planned to expand their head count next year. Just 4% were planning cuts.
Galvin noted that the uncertainty surrounding trade had been unnerving. Nonetheless, “people feel good about their prospects,” he said. Laughing, he added: “You can’t have a recession when there’s full employment.”
Strong Gains in Most Industries
Newly created jobs surfaced in nearly every sector.
“‘Strong across the board’ is the message I get,” said Robert Rosener, an economist at Morgan Stanley. “The labor market is continuing to provide the key foundation for the U.S. economy.”
The competition for workers has affected those at the lower end of the pay scale the most, and they have seen some of the biggest advances in wage growth.
Amazon’s decision last year to raise its minimum wage to $15 an hour across the country, too, has turned up the pressure in some places.
The Labor Market as a Toothpaste Tube
In a newsletter this week, David Kelly, chief global strategist at JPMorgan Funds, compared recent hiring to squeezing one more glob of toothpaste out of a seemingly empty tube.
“Over the last few years,” he said, “an apparently fully tapped-out labor market has yielded a surprising number of new workers.”
The buffet of job postings has drawn many Americans back to work. Employers have widened their scope, recruiting people with disabilities or criminal records. Older baby boomers are working past retirement age, and stay-at-home parents are switching to paid employment.
Although it ticked down a notch last month, the labor force participation rate was inching up through most of the spring and fall, driven in part by an increase in women ages 25 to 34 who were getting jobs or starting to look for work. Over the last year, nearly 1.7 million people joined the ranks of workers.
Policymakers at the Federal Reserve have emphasized the importance of pulling people off the sidelines, and the latest report offers the central bank fresh reason to delay raising benchmark interest rates.
A broader measure of unemployment, which includes part-timers who would prefer full-time jobs and people who are too discouraged to look for work, crept down to 6.9% last month.
Middle-Income Jobs Can Be Hard to Find
Still, many people working part time or full time remained stuck below the poverty level last year, according to a new report from the Brookings Institution. And stable, secure jobs that pay a middle-income wage can be hard to find across a range of skills.
Alan Kirshner worked as a budget analyst at Bristol-Myers Squibb in New Jersey for 18 years before a restructuring eliminated his job in 2015.
“My goal was to find something more permanent like I had in the past,” he said, “but those opportunities were much more limited.” Companies have used technology to reduce staffing, shifted full-time workers to contracts and often moved better-paying jobs out of the country or to lower-cost areas in the United States.
Kirshner is now a career coach — a business that he controls but that offers no steady income or benefits.
Bias can further handicap some job hunters. Researchers have documented frequent discrimination against workers over 50 and members of minority groups, especially African American women.
Trade Tensions Heighten Anxiety
The White House’s unpredictable trade policy continues to unsettle some businesses and cramp investment, especially in manufacturing.
“When you look globally, there are some tentative signs that the global manufacturing slowdown is bottoming out,” Michael Gapen, chief U.S. economist for Barclays, said. “But it may take the U.S. manufacturing sector a little longer than the rest of the world to stabilize.”
A trade agreement with China would, of course, be welcome, but Gapen said that at this point, he did not expect it to do much to lift growth.
“It’s more of a going back to the beginning,” he said, noting that in the end, China is likely to commit to agricultural purchases that it might have made earlier without tariffs.
The government will revise its November job estimates two more times and its October estimate once more.
Taken together, the average payroll increases, the low jobless rate and the growing share of adults joining the workforce point to a strong foundation, said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “I think the labor market overall is looking pretty healthy.”