Non-farm payrolls miss expectations, unemployment rate steady

US non-farm payrolls rose less than expected last month, while the unemployment rate held steady, according to data released by the Labor Department on Friday.

Total non-farm payroll employment was up 155,000 in November, missing expectations for a 200,000 jump, while the unemployment rate came in unchanged as expected at 3.7%, its lowest level since 1969 and remaining at that rate for the third month in a row.

The payrolls figure for October was revised down from a previous gain of 250,000 to 237,000, while the figure for September was revised up from a 118,000 increase to a 119,000 jump.

By sector, manufacturing added 27,000 jobs, while retail added 18,000 and transport added 25,000. Leisure and hospitality added 15,000, while education and health added 34,000.

Meanwhile, average hourly earnings were up 3.1% from a year ago, in line with expectations and unchanged from the previous month. The average work week nudged down by 0.1 hours to 34.4 hours.

On the month, average hourly earnings were up 0.2%, missing expectations for 0.3% growth but up from a 0.1% increase in October.

Paul Ashworth, chief US economist at Capital Economics, said the "slightly more modest" gain in payroll employment in November may not go down well in markets given the heightened nervousness in recent months, but this is still a solid gain that suggests economic growth is gradually slowing back towards its potential pace.

"There is nothing here to suggest the economy is suffering a more sudden downturn.

"Admittedly, 155,000 was below the consensus forecast at 200,000 and the six-month average, which was slightly above 200,000. But gains of that magnitude should still be enough to keep the unemployment rate grinding lower," he said.

"Overall, employment growth may be fading a little from the unsustainable pace in the first half of this year, but there is nothing here to unduly worry the Fed or prevent it from hiking interest rates at this month’s FOMC meeting."

Ian Shepherdson at Pantheon Macroeconomics said t’s tempting to think that the trade tariffs are responsible for this below-trend reading, but manufacturing employment rose a solid 27,000, the best performance since April.

"Most of the downshift from October, when payrolls rose 237,000 - boosted by the return to work of people temporarily pushed off payrolls by Hurricane Florence - is in the services sector, with relatively soft readings from finance, leisure and hospitality, and information services.

"All these components are very noisy month-to-month and we see no sign of softening trends. Construction was also weak, with payrolls up just 5,000, the worst month since March. The drop in home sales in the past couple of months likely is responsible for a good part of this softness, but we think activity has been hit by the hurricanes and will rebound in the next couple of months. Overall, we see little evidence that labor demand is weakening."