US payrolls stabilized to add 227,000 in November following October disruptions from weather and strike events. The pace of job growth in the second half of 2024 now averages 137,000, below 2019 levels but consistent with healthy gains and an economy near full-employment.

The unemployment rate edged up to 4.2% reflecting a rise in permanent job losses, yet layoffs remain subdued overall and initial unemployment claims have not risen in tandem. Labor force exits jumped in November, likely driven by ongoing retirements, underscoring demographic challenges even as new entrants continue to add to the workforce.

The US labor market remains on healthy footing heading into year end. Looking ahead, signals of rising confidence among businesses and job-seekers bring cautious optimism to our 2025 labor market outlook. Moreover, reduced uncertainty post-election and Federal Reserve interest rate cuts will help lift hiring demand and maintain labor market’s strength.

Trusted Insights for What’s Ahead™:

• November payrolls added 227,000 jobs, recovering from October’s weather and strike disruptions, with payrolls growing broadly across sectors.
• The unemployment rate ticked up to 4.2%, driven by permanent job losses for the second consecutive month, but layoffs continue to remain low overall.
• Earnings growth remains at 4% year-over-year, topping expectations of a continued decline. Growth in average hourly earnings now shows a reacceleration trend over 2H 2024, underscoring the persistence of talent challenges.
• High employment and strong incomes, coupled with rising consumer and business confidence, offer cautious optimism for the labor market outlook in 2025.

Figure 1. Payrolls rebound, sector concentration persists

Report Highlights:

Payrolls Stabilize as Storm Impacts Subside
US payrolls added 227,000 in November, reflecting catch-up from October’s disruption-impacted report. While September and October’s gains were revised upward, the slowdown in employment growth is evident. The average gains in the second half of 2024 now stand at 137,000—fewer than the 166,000 pace in 2019—but this is potentially still a rate that maintains levels close to full employment.

Job gains continue to be concentrated in a handful of sectors (Figure 1). Healthcare continued to lead in job creation, adding 72,000 workers, while government hiring slowed slightly to add 33,000. Sectors hardest hit by weather and strikes—including manufacturing and construction—showed some recovery. Manufacturing employment ticked up by 22,000, recouping about half of October’s losses tied to strikes, while construction added 10,000.

Notably, payrolls were strong in leisure and hospitality, which added 53,000 workers in November with gains in each of restaurants, entertainment, and accommodations. The retail sector continued its 2H 2024 trend of shedding workers, losing an additional 28,000 in November on a seasonally-adjusted basis. Given indications of strong holiday sales and activity, November’s decline in retail employment could reflect holiday shopping shifting from in-person to online.

Unemployment Rises Moderately from Job Losses
The Household Survey showed substantial workforce churn in November with the unemployment rate increasing to 4.2% from 4.1%. The number of unemployed individuals rose by 161,000 as permanent job losses increased for the second consecutive month (Figure 2). Of the roughly 170,000 temporary and permanent layoffs reported in October, which we partially attributed to weather and strike impacts, only 50,000 appear to have been recovered in November, seen in the decline in temporarily laid-off.

Figure 2. Permanent job losses rise for consecutive months

Household employment fell by 355,000 in November, while those outside the labor force increased 368,000. Labor force exits in November were driven by an increase in respondents that “do not want a job now,” likely related to retirement of the aging US workforce. That decline is not a meaningful indicator of weakness but does undergird concern of talent shortages and demographic challenges to labor force growth.

New and returning workforce entrants may compensate for retirements, but the job-finding environment has been less accommodating and these workers continue to lift unemployment by an outsize share.

Hiring Remains in Focus
While the labor market remains healthy, the pace of hiring continues to slow going into 2025. November’s report showed the job-finding rate from unemployment falling to the lowest level of the post-pandemic period (Figure 3). Meanwhile, the overall JOLTS hiring rate is comparable to 2013 and has remained in that range for several months. These dynamics could partially reflect the composition of the types of people looking for work as we continue to see the US economy at near full-employment but the slowdown is evident when compared to pre-pandemic rates.

Figure 3. Job-seekers see challenging environment

The consecutive increases in permanent job losses is a warning that unemployment could increase in 2025 if layoffs begin rising without a pickup in hiring. While unemployment has remained stable over 2H 2024, the duration of unemployed workers continues to expand. Workers unemployed for 27 weeks or more now makeup more than 23% of total unemployed, a level comparable to 2017 which was relatively low. This supports the narrative that most all workers who want a job have one, while a more difficult hiring different environment faces those newly entering the market and those who experienced extended jobless over the pandemic period.

Figure 4. Length of unemployment highlights job-finding issues

Wage Growth Continues Despite Softening Labor Market
Workers’ earnings growth reaccelerated in 2H 2024 following the slower pace of wage appreciation over 2022-2023 (Figure 5). November’s 0.4 percentage point rise in average hourly earnings held year-over-year growth at 4%. Growth in pay for production and non-supervisory workers also rose slightly from midyear and stands at 3.9%. This intensification of wage pressures underscores that talent challenges continue in specific sectors and regions and are being amplified by ongoing low turnover and slowing labor force growth.

Figure 5. Wage growth has held firm after long decline

2025 Outlook Improving?
The US labor market remains resilient as the end of 2024 nears, despite recent concerns about a hiring slowdown. Signs of rising confidence among businesses and job seekers, coupled with reduced policy and interest rate uncertainty, bring cautious optimism of continued labor market strength in 2025.

JOLTS job openings rebounded in October to rise by 370,000, with particularly strong demand among small businesses. Meanwhile, the rate of worker quits rose to its highest level since May at 2.1%.

Figure 6. More CEOs expecting workforce expansions in 2025

These trends are consistent with The Conference Board Measure of CEO Confidence® for 4Q 2024, which showed the highest share of CEOs since 2023 expecting employment expansion over the subsequent 12 months (Figure 6). The monthly Consumer Confidence Index® from The Conference Board also shows sentiment improving, with an increase in November driven by consumers assessments of jobs being currently “plentiful” and an improving 2025 outlook. Together, these data form an optimistic case for where the US labor market is today and its trajectory going into next year.