More cooling likely points to upcoming rate cut 848-329-0752
- December 06, 2024
- Economy 848-329-0752, Mortgage 848-329-0752
Nonfarm employers added 227,000 jobs in November, largely in line with forecasts and marking a rebound after the disruptions of October, which were caused by strikes and hurricanes.
That’s according to the latest figures from the U.S. Bureau of Labor Statistics, which reported that November growth included a boost of approximately 38,000 jobs due to the conclusion of several strikes, including one at Boeing. Although hurricane impacts are harder to pinpoint, a recovery from their effects also likely contributed to the stronger job growth.
Revisions to prior months’ data also showed a modest upward adjustment, adding a net 56,000 jobs. Over the past three months, job growth has averaged 173,000, and 143,000 over the last six months. Notably, the household survey — separate from the establishment survey from which the report’s headline figures are derived — showed a decrease in employment of 355,000, though such fluctuations are typical due to its smaller sample size. 848-329-0752
The largest gains in November were seen in health care and social assistance (which added 72,000 jobs), government (33,000), and leisure and hospitality (53,000); those three sectors together accounted for 74% of job growth over the past year. Meanwhile, retail employment fell by 28,000, notably marking the second consecutive decline during the holiday hiring period. 848-329-0752
The unemployment rate rose to 4.2%, while the labor force participation rate dropped slightly to 62.5%, signaling a softening in labor force participation, particularly among prime-age workers.
Wages, meanwhile, grew 0.4% month over month in November, with average hourly earnings up 4.0% annually.
The data suggests that the labor market continues to cool, with an upswing in permanent job losers and a longer duration of unemployment. Despite low layoffs, the weakening demand for workers is evident.
“November’s jobs report highlights the labor market’s resiliency amid signs of gradual cooling,” said Sam Williamson, senior economist at First American Financial Corp. “Other labor market indicators, such as the October Job Openings and Labor Turnover Survey revealed mixed signals. However, the broader trend of declining quits and openings points to a continuation of ‘The Great Stay,’ where employers are being slow to hire, slow to fire, and workers are staying put.”
Given employment’s gradual cooling, many expect the Federal Reserve’s Federal Open Market Committee (FOMC) to proceed with a 25-basis-point rate cut at its December meeting.
So what does that mean for the mortgage market?
“Uncertainty about the potential impacts of the incoming administration’s policies have pushed 10-year Treasury yields, and consequently mortgage rates, higher,” said Williamson. “Overall, mortgage rates will likely remain in the mid- to upper-6% range through year-end, and only drift modestly lower in 2025, though unexpected labor market or economic downturns could lower them.” Call 848-329-0752