US hiring complicating Fed’s inflation fight

WASHINGTON

The nation’s employers kept hiring briskly in November despite high inflation and a slow-growing economy, a sign of resilience in the face of the Federal Reserve’s aggressive interest rate hikes.

The economy added 263,000 jobs, while the unemployment rate stayed 3.7%, still near a 53-year low, the Labor Department said on Nov. 2.

All year, as inflation has surged and the Fed has imposed ever-higher borrowing rates, America’s labor market has defied skeptics, adding hundreds of thousands of jobs, month after month.

With not enough people available to fill jobs, businesses are having to offer higher pay to attract and keep workers. In November, average hourly pay jumped 5.1% compared with a year ago.

Since the pandemic, many older workers have taken early retirement. In addition, several hundred thousand working-age people have died from COVID-19.

And many families have struggled to find or afford child care, leaving some adults unable to return to work.

The strength of the hiring and pay gains raised immediate concerns that the Fed may now have to keep interest rates high even longer than many had assumed.

“This will be a reminder to the Fed and to the markets that the job on inflation is not done,” said Blerina Uruci, chief U.S. economist at brokerage T. Rowe Price.

“They really need wage pressures to be on a more sustained downward path. So that certainly calls for interest rates to remain higher for longer.”

Last week, Fed Chair Jerome Powell stressed in a speech that jobs and wages were growing too fast for the central bank to quickly slow inflation.