The US labor market regained its momentum in November — adding 227,000 jobs — as the (literal) clouds that overshadowed October’s report have parted. Back-to-back hurricanes in the south, paired with strike activity, led to a weak initial gain of 12,000 jobs in October. With today’s report, however, that number was revised up to 36,000 — a sign that the labor market was clearly impacted by hurricane activity, but not as much as previously thought. With clearer skies and increased visibility, it is apparent that the US labor market continues to steadily cool as it makes its way to a soft landing. 

While more than half of industries added jobs in November, most gains were concentrated in a few key sectors — health care and social assistance, government, and leisure and hospitality together accounted for 70% of net job gains in November. Meanwhile, retail trade shed 28,000 jobs, perhaps due to a later Black Friday that delayed hiring beyond the data collection period. Still, worker demand remains robust, as evidenced by elevated average hourly earnings growth, mirroring recent strength in other indicators like the Indeed Wage Tracker.

While unemployment ticked up slightly from the previous month at 4.2%, there is no immediate cause for concern given that the rate remains historically low. However, the share of people between the ages of 25 and 54 with a job has dropped by half a percentage point in the last two months, which is concerning and will be important to keep an eye on going forward. 

Today’s report emphasizes that the labor market remains relatively strong and that policymakers at the Federal Reserve have some room to work as we approach a soft landing. Widespread recession fears, elevated inflation, strike activity, a banking crisis, geopolitical conflict, and significant weather disruptions have generated their fair share of turbulence in recent years, but the US labor market has successfully navigated each and remained steadfast so far. While the economy remains on the trajectory toward a soft landing as we move toward 2025, the outcome remains unclear, as economic outcomes will depend on how policymakers pilot the plane and what objectives they prioritize next year.