US Employment and Wages Continue to Rise, Pressuring the Fed

Wages and employment continue to rise in the US, placing pressure on the Federal Reserve. In the US, companies added more jobs than expected, and salaries increased by the most in almost a year, indicating persistent inflation pressures that increase the likelihood that the Federal Reserve will raise interest rates.

Following an upwardly revised 284,000 rise in October, nonfarm payrolls grew by 263,000 in November, according to Labor Department data released on Friday. As participation fell, the unemployment rate kept steady at 3.7%. After an upward revision to the previous month, average hourly earnings increased twice as much as anticipated.

In a Bloomberg survey of analysts, the median predictions predicted that payrolls would increase by 200,000 and that the unemployment rate would remain at 3.7%. As investors anticipated a more aggressive posture from the Fed, US markets opened lower, and Treasury yields increased.

Jobs were added in a small number of sectors, with an increase in leisure and hospitality, healthcare, and government leading the way. In the meanwhile, businesses in retail, transportation, warehousing, and temporary staffing services made workforce reductions.

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The stronger-than-expected payroll growth underlines the employment market’s continued strength in the face of rising interest rates and worries about an impending recession. Many economists predict that businesses will be more reluctant to fire employees in the event of a crisis due to the ongoing imbalance between the demand and supply for workers, which continues to support wage increases.

According to the jobs data, average hourly earnings increased by 0.6% in November, marking the most significant overall gain since January. They also increased by 5.1% from a year earlier. The most since almost a year, industrial and nonsupervisory employee wages increased by 0.7% over the previous month. The rate of pay increases is not meeting the Fed’s 2% inflation target.

Before their December meeting is held, when the central bank is anticipated to slow the pace of interest-rate increases to a half percentage point, Fed officials will have only this jobs report in their possession. According to recent data on inflation, price pressures are progressively easing but are still very high.