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Watch Friday's Jobs Report for Clues on Economy's Trajectory

By Sarah Chaney 

The Labor Department will release the November jobs report on Friday, offering a view of the U.S. economy's health as the year winds down. Economists surveyed by The Wall Street Journal expect employers added jobs at a solid pace during the month while unemployment remained historically low. Here is what to watch for in the jobs report, due out Friday at 8:30 a.m. ET.

Strike Bounce

Watch for a bounceback in employment last month as General Motors Co. workers, who were on strike in October, returned to work. Employment in auto manufacturing fell by more than 40,000 in October because of the strike. Economists expect the return of GM strikers to help drive November job growth to 187,000, from 128,000 in October.

U.S. employment growth has cooled this year amid an economic slowdown. Employers added an average 167,000 payrolls each month in 2019, down from an average of 223,000 in 2018.

Under Four

Friday's report is expected to show the November unemployment rate remained at 3.6%, in line with October. The jobless rate has logged in at or below 4% for 20 straight months, the longest such stretch since the 1960s. The historically low rate is a sign that most workers who want a job can land one. The question now is how much further unemployment can fall. This year, it has stabilized between 3.5% and 4%.

Participation

Watch for whether the share of Americans working or seeking work continues to provide juice for job growth. The labor-force participation rate rose in October to the highest level since August 2013. Meanwhile, participation among those in their prime working years -- between the ages of 25 and 54 -- reached a 10-year high in October. The rise in labor-force participation is a sign that Americans remain confident in their job prospects. But a large pool of people ready to work may be one factor holding down wage gains.

Sluggish Paycheck

Wage growth is losing momentum compared with early this year, despite the unemployment rate trending near a 50-year low. Economists forecast the jobs report to show average hourly earnings advanced 3% from a year earlier, for the third straight month in November. Stagnating wage growth suggests the labor market isn't as tight as a 3.6% unemployment rate implies, said Indeed economist Nick Bunker. "Employers are still able to fill positions, often without pushing wages too much higher." Pay raises have been higher, however, for nonsupervisory workers. Their wages increased 3.5% from a year earlier in October. Wage growth for workers in certain low-wage industries, such as clothing stores and casinos, has picked up more than in other industries, Mr. Bunker said.

Temporary Slip

Temp-worker hiring tends to jump in the early stages of a recovery and crash as the economy stumbles toward a recession. Lately, it has been looking a little weak. Temporary-help employment peaked in December 2018 and has since fallen in six of the past 10 months. "Although we can only compare to two prior business cycles, this indicator bears close watching," Moody's Analytics economist Maria Cosma said. But this expansion, the longest on record, has shown it isn't always like other business cycles: Tried and true warning signals have set off false alarms during a manufacturing mini-recession from 2015-16 and again more recently amid an uncertain global outlook and another factory slump. Manufacturing's malaise could again be at play. An alternative explanation: With unemployment near a 50-year low, workers have the bargaining power to demand permanent positions.

--Eric Morath and Jeffrey Sparshott contributed to this article.

Write to Sarah Chaney at sarah.chaney@wsj.com

 

(END) Dow Jones Newswires

December 06, 2019 00:15 ET (05:15 GMT)

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