November Jobs Report Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s reaction to this morning’s U.S. Bureau of Labor Statistics report on employment conditions in November.  

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“The pace of job growth picked up slightly in November, with an increase of 199,000 compared to 150,000 in October.  As in recent months, job growth has been concentrated in just a few sectors, notably health care, government, and leisure and hospitality, while employment is little changed or declining in other sectors. Wages increased at a 4% rate over the past year, a pace likely too rapid to be consistent with the Fed’s 2% inflation target. These trends, in combination with the drop in the unemployment rate to 3.7% from 3.9% in October, paint a picture of a job market that is still strong, even though the number of job openings has declined, and at least some sectors are seeing an increase in layoffs.

“Construction employment was flat for the month. We expect that homebuilders will continue to be the key source of housing supply next year, so we might see further employment growth in the sector, even if the economy slows as we anticipate.

“Interest rates jumped in response to this report, as job market strength may be enough to keep the Fed cautious with respect to any comments regarding the path for rates at their December meeting.  Inflation is declining, but further declines are likely dependent upon some slowing in the job market.  We continue to forecast that the Fed will begin to cut rates in the spring of 2024, as job market trends are likely to weaken from here.”