After an unexpectedly strong October payrolls report (which was since revised slightly downward to 237K jobs from 250K mostly to reflect the payback from jobs lost to “hurricanes” in September), November came in disappointingly low, with only 155K jobs added, 33K below the 198K expected.
However, like last month, it appears that weather – this time the abnormal cold during the survey week – again impacted the seasonally-adjusted job count, with “workers unable to work due to bad weather” printing at a substantial 129K, well above recent prior Novembers (2017 was 84K, 2016 was 19K, 2015 was 97K). Furthermore, as Southbay Research confirms, it indeed appears that one can blame the weather for today’s miss, as follows:
Supply Chain (ex retail) Strong
- Manufacturing: +27K (3rd highest for the year)
- Transportation: +25K (a 3 year high)
- Wholesale: +10K (3rd highest for the year)
Of note here, the surprisingly strong increase in manufacturing jobs (+27,000) suggests the payrolls miss this month was not about tariffs.
Weather-Sensitive Sectors Hit
- Retail: +18K (vs 27K November 2017)
- Leisure & Hospitality: +15K (vs. 20K November 2017)
- Construction: +5K (vs. 42K November 2017)
- Mining: -3K (vs. +6K November 2017)
While weather may have affected jobs, it was not immediately clear if it also hit wages, which also disappointed, and while printing 3.1% Y/Y, the November average hourly earnings came in at 0.2%, below the 0.3% expected, while October was revised lower to 0.1%, even as the average November workweek declined fractionally by 0.1 hour to 34.4 hours.
Still, wage pressures appear to be abating. Average hourly earnings for total private industry have risen 0.18% per month so far in Q4, compared to +0.32% in Q3, +0.24% in Q2, and +0.20% in Q1. Heavy cooling in wages for the mining and logging, wholesale trade and utilities industries.
Weather and wages aside, the job market continues to grow at a pace that will continue pressuring the unemployment rate, reflected in the number of job openings which have been greater than the number of unemployed workers for 5 months in a row.
Of course, much of this overheating in the US labor market is the result of Trump’s fiscal stimulus, whose impact will soon begin to fade at a rapid pace as payback time comes, which has prompted many to ask if we have hit “peak jobs.” Until we get the answer, however, the labor market remains strong with the following sectors especially hot:
- Manufacturing workers added 27,000 jobs, with increases in chemicals (+6,000) and primary metals (+3,000).
- Employment in transportation and warehousing rose by 25,000 in November, with job gains in couriers and messengers (+10,000) and in warehousing and storage (+6,000).
- Professional and business service jobs added +32,000 jobs, with temp help workers adding a solid 8,300 jobs.
- Retail trade employment changed little in November (+18,000). Job growth occurred in general merchandise stores (+39,000) and miscellaneous store retailers (+10,000); this growth was offset by declines in clothing and clothing accessories stores (-14,000); electronics and appliance stores(-11,000); and sporting goods, hobby, and book stores (-11,000).
Looking over the past year, the following charts from Bloomberg show the industries with the highest and lowest rates of employment growth for the prior year. The latest month’s figures are highlighted.