November 2023 Employment Report

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The Bureau of Labor Statistics’ (BLS) establishment survey showed nonfarm employers adding 199,000 jobs in November (+180,000 expected). Also, September and October 2023 employment changes were revised down by a combined 35,000 (September: -35,000; October unchanged). Except for July and October, job gains of all months in 2023 have been revised lower.

Meanwhile, the unemployment rate (based upon the BLS’s household survey) edged down to 3.7%, as growth in the number of employed (+747,000) exceeded that of the labor force (+532,000). 

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Observations from the employment reports include:

* For a change, the two surveys moved in parallel, which augments their credibility. Also, the CES (business birth/death model) adjustment (+4,000) was very modest, and the seasonal adjustment was slightly smaller than the average November of the prior decade. It is worth noting, however, that the numbers included about 47,000 formerly striking auto and motion picture workers returning to work.

* Goods-producing industries gained 29,000 jobs; service providers: +170,000. Job gains occurred in health care (+76,800) and government (+49,000). Employment also increased in manufacturing (+28,000), reflecting the return of workers from a strike. Employment in retail trade declined (-38,400). Total nonfarm employment (157.1 million) is now 4.7 million jobs above its pre-pandemic level in February 2020 (private sector: +4.6 million; public sector: +96,000). Nonetheless, employment is perhaps 5.1 million below its potential if accounting for growth in the working-age population since January 2006.

As mentioned above, manufacturing added 49,000 jobs (led by durable goods: +36,000), thanks to an increase of 30,000 in motor vehicles and parts consistent with the end of strike activity. That result disagrees with the change in the Institute for Supply Management (ISM) manufacturing employment subindex, which contracted further (to 45.8) in November. Wood products manufacturing gained 1,000 jobs (ISM was unchanged); paper manufacturing: -500 (ISM decreased); construction: +2,000 (ISM increased).

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* The number of employment-age persons not in the labor force fell (-352,000) to 99.6 million; that level is 4.4 million higher than in February 2020. Because the working-age civilian population expanded (+180,000) more slowly than the number of employed (+747,000), the employment-population ratio (EPR) rose to 60.5%, which is 0.6PP below its February 2020 level. 

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* Also, because the working-age civilian population grew by 180,000 while the labor force expanded by 532,000, the labor force participation rate increased fractionally to 62.8%. Average hourly earnings of all private employees nudged up by $0.12 (to $34.10), and the year-over-year increase was unchanged at +4.0%. Because the average workweek for all employees on private nonfarm payrolls edged up to 34.4 hours, average weekly earnings rose (+$7.53) to $1,173.04 (+4.0% YoY). With the consumer price index running at an annual rate of +3.2% in October, the average worker appears likely to have gained a bit of purchasing power. 

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* Full-time workers rose (+347,000) to 134.8 million; there are now 4.1 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has risen by 8.2 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- fell by 295,000, while those working part time for non-economic reasons jumped (+323,000); multiple-job holders: -15,000. 

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For a “sanity test” of the job numbers, we consult employment withholding/FICA taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in November retreated by $11.8 billion, to $240.7 billion (-4.7% MoM; +1.3% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending November was up 1.0% from the year-earlier average.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.