United States: Job Creation Gets a Lift after Auto Strike Ends

Hiring picked up in November. This came as no surprise, as the consensus forecast called for 180,000 jobs to be created. Some of that growth came from the auto industry. The end of the strike in late October bumped up payrolls in this sector by 30,000 after a 32,000 drop.

Even if we ignore the increase in the auto industry, the job market continued to show significant resilience. Net hires excluding this sector went from 182,000 in October to 169,000 in November, which is still a big increase. It's certainly less than the surprise number in September (+253,000 excluding the auto industry), but it is close to the average of 168,000 observed in the previous three months. In short, the labour market remains fairly robust.

But certain sectors nevertheless show some weakness. The most noticeable declines were in retail, which shed 38,400 jobs in November (especially in department stores), and temporary help services, which lost 13,600 jobs. In fact, of the 250 sectors surveyed in November, the share that had seen payrolls climb stayed relatively low (54.6%). This is better than October's 52.2% reading but less than the average of 58.0% recorded over the first nine months of 2023.

The ongoing resilience of the labour market is surprising in the current economic environment. High interest rates could easily have had a bigger impact on job creation. For now, it seems that job openings have been impacted more than payrolls. This is backed by October's print, which showed job vacancies were down by 617,000. Now it's time to see if this trend will be enough to ease upward pressure on wages. November's 0.4% rise in average hourly earnings puts a damper on this scenario.

November's household survey reflected the survey’s excessive volatility. It showed jobs going up by 747,000 after 348,000 net layoffs in October. We therefore need to be careful about using these results. To be significant, monthly movements must be greater than ±600,000 jobs, whereas the threshold for the establishment survey is ±130,000. That said, the drop in unemployment limited the upward trend that has prevailed since the low of 3.4% seen in April.

The rebound in hiring was due in part to the end of the strike in the auto industry. However, even if we exclude this sector, the labour market has proven resilient. And November's figures aren't expected to change the minds of Fed officials, who will probably maintain the status quo next week, although higher average hourly earnings might be a source of concern.