Nonfarm payrolls rose by a seasonally adjusted 199,000 in November, which was boosted by sizeable gains in government hiring as well as workers returning from strikes in the auto and entertainment industries.

The unemployment rate declined to 3.7%, and signs of underlying labor market strength suggest that financial market expectations of an interest rate cut early in 2024 were probably premature. Average hourly earnings, a key inflation indicator, increased by 0.4% for the month and 4% from a year ago.

Still, the labor market is cooling. The economy added 35,000 fewer jobs in September than previously estimated. November’s employment gains were below the monthly average of 240,000 over the previous year. Nonetheless, payroll gains are well above the 100,000 jobs per month needed to keep up with growth in the working-age population. Employment numbers were boosted in part by the return of automobile workers and actors after their strikes. The healthcare sector led the increase in payrolls, adding 77,000 jobs – most of which were in ambulatory services as well as at hospitals, nursing, and residential care facilities. Government payrolls jumped by 49,000 jobs, boosted by local government hiring. Manufacturing employment increased by 28,000 jobs, with motor vehicles and parts jobs rising the most as members of the United Auto Workers (UAW) returned to work after striking against Detroit’s “Big Three” car makers.