U.S. labor market is still robust with nearly 200,000 jobs created in November

The labor market proved unexpectedly solid in November, with both payrolls and pay increasing — elevating hopes of a soft landing for the U.S. economy.

Nonfarm payrolls rose 199,000 last month and the unemployment rate fell to 3.7%, the Bureau of Labor Statistics reported on Friday. The monthly job additions exceeded expectations, which had economists polled by FactSet calling for businesses to create about 175,000 jobs. Employment growth is slowing from the average monthly gain of 240,000 over the last 12 months.

Average hourly earnings rose 0.4% last month to $34.10, an increase of 4% over the last 12 months, a key metric for workers looking to stay ahead of inflation.

"We're running out of superlatives to describe just how resilient the U.S. labor market is and has been," offered Nick Bunker, director of economic research at Indeed Hiring Lab. "The pace of jobs being added is no longer bonkers, but it is sustainable. Unemployment ticked down, alleviating any fears that the U.S. economy might soon tip into a recession," he noted in an emailed analysis.

"This was a much better than expected payroll report, more so because it puts to bed fears about a deteriorating labor market amid a rising unemployment rate over the last several months," Sonu Varghese, global macro strategist at Carson Group, said in an email.

The monthly jobs report is watched closely by the Federal Reserve, which has been raising interest rates since early 2022 in an effort to put the brakes on the economy and cool inflation. Most strategists are now forecasting that the central bank will hold rates steady at its next meeting, scheduled for December 13.

The end of strikes by autoworkers and Hollywood actors increased payrolls by 47,000 according to the Bureau of Labor Statistics. Still, the underlying pace of payroll additions has been slowing. Stripping out that one-time boost, the 152,000 gain was roughly in line with the muted increase in October, noted Paul Ashworth, chief North American economist at Capital Economics. 

Those gains including 49,000 government jobs and another 77,000 in health care. If those non-cyclical sectors were taken out of the equation, the economy added just 26,000 jobs, adding to evidence that "after a very strong third quarter, growth is slowing to a crawl in the fourth quarter," Ashworth wrote in a note to clients.

Wall Street offered a positive take on the jobs report, with the Dow Jones Industrial Average lately up more than 120 points.  

In:
• Employment
• Economy

Kate Gibson

Kate Gibson is a reporter for CBS MoneyWatch in New York.