US jobs growth slowed sharply last month, raising questions about whether the Federal Reserve will pursue a more aggressive approach to scaling back its stimulus programme.
Employers in the world’s largest economy added just 210,000 jobs for the month, a steep drop-off from the 546,000 positions created in October and well below economists’ forecasts of 550,000. Since the start of the year, monthly gains have averaged 555,000.
The unemployment rate dropped 0.4 percentage points to 4.2 per cent. Less than six months ago, it hovered closer to 6 per cent.
But the data released by the Bureau of Labor Statistics on Friday showed only modest improvement in the number of people employed or looking for a job.
The so-called labour force participation rate, which has stagnated since June 2020, ticked up to 61.8 per cent for November from 61.6 per cent in October, but is still about 1.5 percentage points lower than the pre-pandemic threshold.
Childcare issues and Covid-related concerns are among the reasons most often cited for holding back people from returning to the workforce – a dynamic that could be exacerbated by the recent emergence of the new Omicron coronavirus variant.
Impede progress
Loretta Mester, president of the Federal Reserve Bank of Cleveland, warned of this risk in an interview with the Financial Times on Thursday. Jay Powell, chair of the US central bank, also alluded to it during two days of congressional testimony earlier this week, noting another Covid-19 wave could impede progress in the labour market and worsen supply-chain disruptions.
That could mean more muted employment gains, slower economic activity and even greater uncertainty about inflation, which is running at the fastest pace in 30 years, he said.
Employers have already had to raise wages in order to attract workers amid what has become an acute labour shortage, and average hourly earnings increased again in November.
Wages rose another 0.3 per cent month-over-month, bringing the annual pace of wage growth to 4.8 per cent. – Copyright The Financial Times Limited 2021
