Labor Market Insights: November 2022

The BLS job reports for last month were just released! We’ll share our take on the labor market for November 2022 and what it means for you and your company.

Relevant Data Points:

  • New Jobs – The U.S. added 263,000 new jobs (chart below).
    • Significantly better than anticipated, and in direct contrast with the Fed’s efforts to slow the labor market and tackle inflation.
  • Unemployment held steady at 3.7%.
  • Wages – Average hourly earnings jumped 0.6% for the month (double the Dow Jones estimate).
    • Wages were up 5.1% on a year-over-year basis, also well above the 4.6% expectation.
  • Job openings totaled 10.33 million vacancies for the month, a decline of 353,000 from the previous month and down 760,000 compared with a year ago.
  • Hires fell by ~84,000, landing at just above 6 million (chart below).
  • Layoffs rose to nearly 1.38 million, up from 1.33 million the month before.
  • Quits – The quits rate dropped to the lowest level in 17 months, edging lower to 4.026 million, down 34,000 from a month ago and well below the record 4.5 million in November 2021 during what had been dubbed the “Great Resignation.”
    • The quit rate, which hit a record of 3% at the end of last year, fell to 2.6% in October after holding steady at 2.7% for the three prior months.
    • The quit rate is a measure of worker confidence that they can easily move from one job to another (a 17-month decline is a significant indicator in the lack of job seeker confidence).
  • Total separations nudged higher to 5.68 million (chart below).
  • Jobs per available worker dropped to 1.7:1, down from 2:1 just a few months ago.
    • Fed officials have been watching this ratio closely, since tightness in the labor market means employees have greater leverage to seek higher wages, which in turn drives up inflation.
  • LFPR (labor force participation rate) ticked down to 62.1% last month, from its previous value of 62.2%, and 1.3% below its value in February 2020 before the COVID pandemic began (chart below).

What does this mean?

  • The labor market has been surprisingly resilient in the face of successive interest rate increases by the Fed, adding an average of 323,000 jobs for the last six months.
    • The Fed is prodding businesses to reign in expenses as interest rates rise.
    • Recent data indicates that this is working—the job market is cooling, albeit at a slow pace (job openings, a sign of confidence that companies want to hire new talent, dropped by ~350k last month).
  • Fed Chairman Jerome Powell said earlier this week the job gains are “far in excess of the pace needed to accommodate population growth over time” and said wage pressures are contributing to inflation.
    • Given the recent labor and job report, expect additional aggressive action by the Fed.
  • The Information sector gained 19,000 jobs, even as layoffs at technology companies such as Twitter and Meta, the parent of Facebook and Instagram, have grabbed headlines in recent weeks. Although telecommunications businesses lost jobs, every other industry group in the broader sector added jobs last month. The takeaway: layoffs in tech are not showing up meaningfully just yet.
  • Data suggests the “great resignation” has peaked, and the level of replacement hiring from employee churn has leveled off.
  • While we’re averaging 323k new jobs per month (over 6 months), the LFPR continues to edge lower. This will be an interesting/important trend to monitor.


Missed last month’s insights? Catch up here!