November jobs report shows a still-strong labor market

The U.S. job market performed better than expected in November, gaining 227,000 nonfarm payroll jobs from a month prior according to data released Friday by the U.S. Bureau of Labor Statistics (BLS), sending mixed messages ahead of the Federal Reserve‘s meeting next week.

“Today’s report shows a strong labor market, but the employment picture has been a little bumpy over the past few months, as weather events and large labor strikes have complicated the outlook,” Lisa Sturtevant, the chief economist at Bright MLS, said in a statement. “There have been signs that the labor market was cooling some, which could give the Fed confidence to go ahead with another rate cut this month.”

However, Sturtevant warned that if next week’s Consumer Price Index report shows that inflation is continuing to rise, the Fed will certainly rethink any potential rate cut.

For the past 12 months, the job market has gained an average of 186,000 jobs per month. Despite the strong job gains in November, the unemployment rate rose slightly to 4.2% with 7.1 million people unemployed. A year ago, the jobless rate was 3.7% with 6.3 million people unemployed.

The majority of November’s job gains occurred in health care (+54,000 jobs), leisure and hospitality (+53,000 jobs), government (+33,000 jobs), and social assistance (+19,000 jobs), while retail trade lost 28,000 jobs.

The construction sector posted modest jobs gains in November, gaining a total of 10,000 jobs from the month prior. Residential building construction added 1,400 jobs and residential specialty trade contractors added 1,700 jobs. The majority of the job gains in the sector were in nonresidential specialty trade contractors which gained 7,000 jobs.

The real estate and rental and leasing sector added 3,700 jobs, with real estate gaining 1,200 jobs.

According to Sturtevant, the current uncertain economic environment makes is hard to predict where interest rates will end the year.

“Mortgage rates have come down from their recent high over the past couple of weeks, but home buyers are unlikely to see any substantial decrease in rates in the coming weeks, even if the Fed does decide to cut rates,” she said. “At this point, mortgage rates in the mid-6s are probably the best prospective homebuyers can expect.”