The November jobs report leaves the Federal Reserve on track for a gradual pace of interest rate cuts, as both an increase in hiring and an uptick in the unemployment rate point to a moderating labor market, experts say.
U.S. nonfarm payrolls expanded by 227,00 last month, the Bureau of Labor Statistics said Friday, vs estimates for the creation of 220,000 new positions. Furthermore, the September and October payrolls figures were revised upward by a combined 56,000 jobs.
The unemployment rate, which is derived from a separate survey, ticked up to 4.2% from 4.1% the prior month. Economists were looking for the unemployment rate to remain unchanged. Average hourly earnings increased 0.37% in November vs the previous month, whereas economists forecast wage pressures to advance by just 0.30%.
"The November jobs report shows an expected rebound in hiring and no major surprises," said Eric Merlis, managing director and co-head of global markets at Citizens. "The slight uptick in the unemployment rate and dip in the participation rate should convince the Fed to continue its gradual easing path at the December meeting."
Signs of cooling in the labor market prompted the central bank's rate-setting committee, the Federal Open Market Committee (FOMC), to cut the short-term federal funds rate by 50 basis points (bps), or 0.5%, in September. Experts say the November jobs report shouldn't change the FOMC's rate-cut calculus.
As of December 6, futures traders assigned an 87% probability to the FOMC announcing a quarter-point cut at the conclusion of the next Fed meeting, up from 66% a week ago, according to CME Group's FedWatch Tool.
With the November jobs report now a matter of record, we turned to economists, strategists, portfolio managers and other experts for their thoughts on what the data means for markets, macroeconomics and monetary policy going forward.
Please see a selection of their commentary, sometimes edited for brevity or clarity, below.
November jobs report: The experts weigh in
"The November payroll report should sooth bears and bulls alike. The solid nonfarm payroll gain and strong earnings growth should keep the U.S. economic expansion on a sturdy foundation, even as a gradually rising unemployment rate moderates demand and inflationary pressures over time. This report is consistent with a continued gradual easing of restrictive monetary policy that we think will include another quarter point rate cut from the Fed this month." – Scott Anderson, chief U.S. economist at BMO Capital Markets
"Nothing to see here. The labor market is in equilibrium, with the potential to support healthy consumer spending in 2025. The December rate cut doesn't seem to be going anywhere and the positive outlook for risk appetite remains intact. Donald Trump is inheriting a Goldilocks scenario." – David Russell, global head of market strategy at TradeStation
"Job growth rebounded nicely in November relative to October's big miss. Though, as unemployment remains near 4% and markets continue to reach all-time highs, more and more of our attention is being pointed to interest rates. With the Fed cutting in the face of such resilience from the economy, a return of re-inflationary pressures is more likely than we believed several months ago." – Ben Vaske, senior investment strategist at Orion Portfolio Solutions
"The muted rebound in payrolls in November after October's hurricanes and strikes implies that the underlying trend has continued to deteriorate, bolstering the case for the FOMC to reduce the funds rate again later this month. The recent slowdown probably will look even more severe as more data are collected and seasonal adjustment is refined. All told, then, November's labor market data give the FOMC the green light to ease policy again this month. We expect monthly growth in payrolls to average about 100,000 in 2025, steering the FOMC to reduce the funds rate by 25 bps at alternate meetings despite the risk of tariff-fuelled inflation." – Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics
"The payroll report shows that the economy is in a good shape, with income and consumption continuing to drive growth, which is a positive backdrop for equities. Now is not the time to be bearish. This payroll report was somewhat colored by bounce back from hurricane effects and strike resolutions, but still mostly positive with some risks present. Payroll growth has now averaged 173,000 over the last three months, which reflects a healthy pace of net hiring. The unemployment rate did tick up to 4.2%, which only serves to highlight that risks haven't disappeared from the labor market. This likely keeps the Fed on track to cut rates one more time in December, and perhaps pause in January." – Sonu Varghese, global macro strategist at Carson Group
"The economy continues to produce a healthy amount of job and income gains, but a further increase in the unemployment rate tempers some of the shine in the labor market and gives the Fed what it needs to cut rates in December." – Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management
"The monthly employment report came in as expected, which should limit market movement. But around the edges there were some interesting data points. Average hourly earnings continued its recent streak of coming in a bit hotter than expected. This highlights a risk we see of the progress towards the Fed's 2% target is slowing. It seems the market is still pricing in a better-than-average chance of a 0.25% cut at their December meeting, but recent comments from Fed Chair Powell indicate they might be slowing the pace of cuts in 2025. We would point out though that somewhat higher inflation because growth is better than expected is not all bad. The fact is we are entering a 'high change' policy environment with a lot of moving parts. The job market is doing its job of providing a strong basis for continued economic success." – Steve Wyett, chief investment strategist at BOK Financial
"The argument for the Fed to act preemptively to prevent further economic deceleration strengthened today. While today's data was largely as expected, the reality is that job growth has slowed from 207,000 per month in the first half of 2024 to 148,000 in the second half. Easing another 25 basis points appears to be the right call absent any ugly surprises in next week's inflation figure." – Ronald Temple, chief market strategist at Lazard
"We don't see today's report as materially influencing near-term monetary policy expectations. Economic indicators have generally been solid of late and today's employment report furthers that narrative, in our view. Ultimately, we believe the Consumer Price Index report could be highly influential as to the Fed decision." – Russell Price, chief economist at Ameriprise
"Today's jobs report was largely in line with expectations. Beneath the surface, however, there are some positive and negative elements. On the positive side, it was good to see jobs recover from last month's weak report (which was distorted by strikes and hurricanes). There were modest but positive revisions to jobs for September and October. On the negative side, the unemployment rate (which is based on the separate household survey) ticked up. The labor force participation rate edged down to 62.5%, compared to 62.8% a year ago. Average hourly earnings were strong, up 0.4% month-over-month and 4.0% year-over-year. This is probably stronger wage growth than the Fed would like to see and likely not consistent with a 2% inflation target. On balance, I see a mixed but mildly positive report. Jobs recovered after a weak October but the report was not so strong that the Fed would need to refrain from a 0.25% rate cut in December." – David Royal, chief financial and investment officer at Thrivent
"COVID-era distortions seem to be fading away with metrics like job gains and the unemployment rate back to their pre-pandemic averages. The pace of wage growth is an exception, but I'm keen to note two things: First, that the gains could continue to help consumer wallets and confidence adapt to the higher price levels brought on by recent years' inflation pressures. Second, that it doesn't need to shift the Fed's focus on recalibrating their policy stance. This jobs report bolsters our call on the Fed's policy path from here – expect a gradual journey back to what the Fed describes as a 'more neutral level.' A cut in December looks likely, followed by four cuts in 2025 at an every-other-meeting cadence." – Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management
"Nonfarm payrolls rebounded strongly from the hurricane-affected November report, but the slight uptick in unemployment explains why rates are rallying despite the stronger-than-expected jobs figure. We anticipate the Federal Reserve will move forward with a 25 basis point rate cut at its December 18 meeting, barring any surprises from next week's inflation data. A hotter-than-expected CPI could prompt a pause, but we think that scenario is unlikely. Looking ahead, we expect the Fed to signal a higher-for-longer shift in its interest rate projections. With the fed funds rate now likely closer to the long-term neutral rate than previously communicated, the Fed may revise its dot plot to remove some of the projected rate cuts." – Mike Sanders, head of fixed income at Madison Investments
"The November jobs report delivered a host of important data for Fed policymakers to consider as they head into their December policy meeting. There's still a broad expectation that policymakers will deliver another quarter-point rate cut later this month. The bigger question is whether the resiliency of the economy in recent months and uncertainty on multiple fronts for next year will be enough to push policymakers to tamp down expectations for the pace of cuts next year. Measures of inflation have fallen considerably over the past few years, but progress toward the Fed's inflation target has stalled more recently. The November reports on producer and consumer inflation loom large but are unlikely to sway policymakers from delivering a pre-holiday quarter-point cut. It may just come with a warning to all that we shouldn’t expect the Fed to be as generous in 2025." – Jim Baird, chief investment officer at Plante Moran Financial Advisors
