ADP said nonfarm payrolls increased by 534,000 jobs from October to November, which is slightly higher than the September to October increase of 531,000 jobs. The largest share came from the service delivery sector, which accounted for 79 . 4% new jobs. However, due to a possible winter wave of COVID-19, this raises concerns about whether the private sector wage bill will remain at these levels.
Economists believe that job growth will not be able to sustain this pace unless the labor force recovers more strongly in the coming months. This is particularly important as the unemployment rate is about to rise from 4 . 6% to 4 . 5%, which would be the lowest we have seen since March 2022. With the federal vaccination mandate covering more than 100 million workers taking effect on January 4, it has been suggested that private sector payrolls may decline and that the unemployment rate could rise in the coming months. While workers appear to be slowly returning to the labor market, economists believe a deeper surge won’t occur until spring 2022.
Labor force participation is expected to rise slightly from October 61.6% to 61.7%, which is still well below pre-pandemic levels of around 63.3%. With inflation eroding individual purchasing power and tax support shrinking, people are expected to want to get back to work. However, external factors involving pandemic-related barriers to employment continue to hamper the recovery of labor market participation. The Fed has also emphasized equitable job growth across different groups and boosting labor force participation levels as its main objective.
As inflation continues to rise, average hourly wage rates have also reached new levels recently. November’s average hourly earnings are expected to remain at the same level as October’s, at . 4%. Year-over-year average hourly pay rates are expected to be 5%, which would be the highest in three decades. This indicates that inflation is also very important in the Fed’s approach.
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