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WASHINGTON — U.S. employers added a healthy 199,000 jobs last month and the unemployment rate fell, fresh signs that the economy could achieve an elusive "soft landing," in which inflation would return to the Federal Reserve's 2% target without causing a steep recession.
Friday's report from the Labor Department showed that the unemployment rate dropped from 3.9% to 3.7%, not far above a five-decade low of 3.4% in April. The jobless rate has now remained below 4% for nearly two years, the longest such streak since the late 1960s.
Last month's job gain was inflated by the return of about 40,000 formerly striking auto workers and actors, who were not at work in October but were back on the job in November.
The latest jobs report and other recent data portray an economy and a labor market that, while still sturdy, are downshifting back to pre-pandemic norms. Businesses are hiring but are less desperate to fill huge numbers of jobs. More Americans have come off the sidelines to look for work, and immigration has jumped this year.
As a result, employers are finding it easier to hire, with fewer complaints of worker shortages and less pressure to aggressively raise pay, which can fuel inflation.
"What we wanted was a strong but moderating labor market, and that's what we saw in the November report," said Robert Frick, an economist at the Navy Federal Credit Union.
What we wanted was a strong but moderating labor market, and that's what we saw in the November report.
–Robert Frick, Navy Federal Credit Union
A cooling job market is also just what the Fed was hoping to achieve as it sought to slow the economy and inflation with its rapid interest rate hikes in the past year and a half. Hiring has averaged just over 200,000 a month in the past three months, down from an average of about 320,000 in the same period last year.
And most of last month's job gains were concentrated in just a few sectors. The health care industry — doctors' offices and hospitals — added 93,000 jobs in November. Hotels and restaurants added 40,000, and governments 49,000, accounting for nearly all the job growth. By contrast, retailers, shipping and warehousing companies, and temporary help agencies all cut jobs.
Still, last month's hiring gain raised the proportion of Americans who are employed to 60.5%, the highest level since the pandemic struck, though it remains below the pre-COVID level of 61.1%.
In the meantime, wages are growing at a slower but still-healthy pace. In November, average hourly pay rose 4% from a year earlier, matching the previous month's figure, which was the smallest since June 2021. Still, average pay is now growing faster than inflation, which should support consumer spending.
And layoffs remain low, according to government data, despite job cuts at such companies as Panera Bread, a restaurant chain, and Spotify, the music streaming platform, which cited higher interest rates as a reason it had to cut about 1,500 jobs globally.
Becky Frankiewicz, president of the staffing giant Manpower Group North America, said more employers are moving workers they may not need in one part of the company to another division rather than laying them off. Many companies still recall the difficulty they had finding workers during the pandemic and want to hold onto staff.
"Everything we see continues to point to a slow glide into a cooler labor market," she said.
