By Lucie Mutikani
WASHINGTON (Reuters) – U.S. job growth jumped in November after being severely dampened by hurricanes and strikes, but that probably does not signal a significant change in labor market conditions that continue to deteriorate. steadily improving and allowing the Federal Reserve to cut interest rates again this month. .
Nonfarm payrolls increased by 227,000 last month after increasing by 36,000 in October, the Labor Department said Friday in its closely watched jobs report.
Economists polled by Reuters expected job creation to accelerate by 200,000 last month, following a rise of 12,000 previously reported in October.
Estimates ranged from 155,000 to 275,000 jobs. Economists have suggested averaging payroll gains from October and November to get a clearer trend in job growth. The labor market was shaken in October by Hurricanes Helene and Milton as well as a major strike at Boeing (NYSE:) factories on the West Coast.
The initial October payroll count was also likely reduced due to a shorter collection period for survey responses from establishments from which payrolls were derived.
The initial response rate to the establishment survey was 47.4 percent, the lowest since January 1991 and well below the October average of 69.2 percent over the past five years.
The response collection period was only 10 days, the lower limit of the normal 10 to 16 days. Other labor market indicators, including early claims for state unemployment benefits, are consistent with a healthy but slowing job market.
The unemployment rate rose to 4.2% after remaining at 4.1% for two consecutive months. Average hourly earnings increased 0.4% after gaining 0.4% in October. In the 12 months ending in November, wages rose 4.0% after increasing 4.0% in October.
As of Friday morning, financial markets estimated that there was about a 72% chance that a 25 basis point interest rate cut would be seen at the U.S. central bank's Dec. 17-18 policy meeting, CME's FedWatch tool showed.
The Fed has cut interest rates by 75 basis points since September, when it began its easing cycle. Its key rate is now in the range 4.50%-4.75%, after being raised by 5.25 percentage points between March 2022 and July 2023.
As the economy continues to grow at a healthy pace, inflation remains above the central bank's 2% target and President-elect Donald Trump's new administration is uncertain, the prospects for further declines in rates in 2025 are unclear.
Business confidence improved in the wake of Trump's victory on hopes of easing regulations. But his promises to raise tariffs on imports and carry out mass expulsions have sparked concerns about rising prices and disruption in the labor market.
Traders are betting on two more rate cuts next year, with a higher probability than even a third rate cut by the end of 2025.
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