Inflation pressures boost US jobs and wages

Inflation pressures that boost the chance of higher interest rates from the Federal ReserveFederal Reserve have been cited by Bloomberg US employers adding more jobs than forecast, and wages surged by the most in nearly a year.

Nonfarm payrolls increased 263,000 in November after an upwardly revised 284,000 gain in October, a Labor Department report showed Friday. The unemployment rate was at 3.7% as participation eased. The average hourly earnings were twice as much as predicted after an upward revision to the previous month.

The median estimate in a Bloomberg survey of economists was for a 200,000 advance in payrolls and a 3.7% unemployment rate. After the report, US stock futures fell and Treasury yields surged, as investors anticipated a more aggressive stance from the Fed.

Here is the reaction in real-time on Bloomberg's TOPLive blog.

Growth in leisure and hospitality, healthcare and government was the main driver of job gains, leading to growth in a number of categories. The employers in retail, transportation, and warehousing and temporary help services also cut workers.

The jobs market is strong despite rising interest rates and concerns of a looming recession, despite the better-than-expected payrolls increase. The mismatch between supply and demand for workers continues to undermine wage growth and has led many economists to believe that businesses will be more hesitant to lay off workers in a potential downturn.

Some sectors are showing signs of weakness, and that's why they are beginning to show signs of weakness. Many economists expect unemployment to rise next year as tighter Fed policy risks push the US into recession, and they believe it will rise in some cases.

The jobs market needs a balance and the central bank has only seen tentative signs of that, according to Jerome Powell, Chair of the Fed earlier this week. He noted the importance of wage growth and the labor market as a whole in determining the path of inflation.

The jobs report showed that average hourly earnings rose by 0.6% in November, the biggest monthly advance since January, and were up 5.1% from a year earlier in the year. The production and non-supervisory workers' wages increased by 0.7% from the previous month, the most in almost a year. The pace of pay raises is not in line with the Fed's 2% inflation target.

This is the last jobs report that Fed officials will have in hand before their December policy meeting, where the central bank is expected to step down the pace of interest-rate hikes to a still-aggressive half percentage point. Price pressures are slowly cooling, but remain very elevated over the past month, according to inflation data.

The US jobs report is made up of two surveys - one of households and one of businesses. The data sets pointed in different directions, similar to last month. While the business survey showed strong hiring, that of households -- which can be more volatile -- indicated lower employment for a second month.

The labor force participation rate, or the share of the population that is working or looking for work, fell to 62.1%, a four month low. It declined for a third month among those ages 25 to 54.

With the help of Augusta Saraiva, Chris Middleton and Catarina Saraiva.