November 2017 Employment Situation

America’s labor market remained strong during November 2017 according to data from the Bureau of Labor Statistics.  After adding 244,000 in October (downwardly revised from 268,000), employers increased payrolls by 228,000 in the penultimate month of the year.  Our nation’s unemployment rate held steady at 4.1 percent, tied the lowest level since December 2000. 

While not as red-hot as the headline numbers, the details within the report were encouraging.  Average hourly earnings edged higher by 0.2 percent; versus a year ago, average hourly wages gained 2.5 percent, an increase of 0.1 percentage point compared to October.  The average workweek lengthened by six minutes to 34.5 hours.

America’s labor market is tight.  With such a low unemployment rate, those looking for work have a high probability of landing a job.  However, many economists are baffled by the lack of wage pressures.  As we’ve mentioned in earlier notes, the relationship between wages and the unemployment rate is not reacting as many would expect.  As Atlas wrote here, demographics could be one issue disrupting the usual relationship.  Notwithstanding this kink in the Phillip’s Curve, employment data is positive overall. 

America remains in the virtuous segment of the business cycle.  Consumers are willing to part with increasing amounts of money each month (think retail sales), and businesses are starting to add to their capital stocks (think core-durable goods orders).  Additionally, companies continue hiring workers which supports the spending.  This combination of strong economic components will help the Federal Reserve justify tightening monetary policy the day after tomorrow when they finish their final meeting of this year.