Hiring sustains pace in November. Employers brought on a net 263,000 new personnel in November, roughly in line with the prior three-month average. Over 4.3 million jobs have been created year-to-date, which already marks 2022 as the second-best year for employment growth in over two decades, with one month left to go. Hiring was led by sectors still in recovery, with a combined 175,000 new roles at bars, restaurants and hotels, as well as in government and health care. Despite clouds gathering on the economic horizon, onboarding in these pandemic-challenged sectors is sustaining near-term momentum in the labor market.
Expectations for smaller rate hike hold. Amid consistent hiring activity in November, the unemployment rate remained unchanged at 3.7 percent. The measure has not strayed above that mark since March, a stubbornness that may have also contributed to a slight uptick in wage growth last month. Both factors will play a role in the Federal Reserve’s decision-making regarding its planned December rate hike. Current expectations are for a modestly slower, 50-basis-point adjustment, given October’s slightly lower CPI inflation figure. While mildly stronger wage gains contribute to price pressure, other factors are on the decline.
Signs of future inflation slowdown mount. Several disinflationary trends are building, but yet to manifest in the CPI data. U.S. gasoline prices have fallen back to where they were before war broke out in Ukraine, while transoceanic shipping fees are also notably down. Decelerating multifamily rent growth should also factor into the CPI calculation in coming months. These forward-looking expectations contribute to an anticipated softer response from the Fed.