November 2023 Labor Market & Economy Report: Positive News Prompts Fed to Project Lower Interest Rates in 2024

By Mike McGuire | December 21, 2023

Inflation and unemployment eased slightly last month alongside better-than-expected job growth, prompting the Fed to suggest that lower interest rates are a possibility in 2024.

But beneath that positive news lies some underlying pain as the broader economy slows.

Here's the rundown for November:


Drawing inspiration from a line in National Lampoon's Christmas Vacation, one might convey our inflation struggles by saying the only thing more surprising than waking up with your head sewn to the carpet is the cost of thread.

On the bright side, inflation went down slightly last month from 3.2% to 3.1%, inching us closer to the nineteen-month low of 3.0% hit in June, but still a ways off from the ideal rate of 2.0%.

In terms of relief, we're seeing softer prices for gas, fuel oil, health insurance, smart phones, clothing, many electronics, and home furnishings.

In terms of downward trending pain, we're still getting squeezed by the cost of housing and food, but the rate of inflation for both of those categories year-over-year has been easing, albeit slowly.

In terms of upward trending pain, car insurance and car repairs costs have risen of late, up 19.2% and 12.7% since last year, respectively. If attending a sporting event or taking a pet to the vet, expect to pay 16% and 9% more, respectively.

Looking ahead, the Fed's outlook on inflation has improved since the fall, and the board is currently projecting a 2.8% rate by the end of 2023 and 2.4% by the end of 2024. The Fed's ultimate goal is 2.0% by 2026.

Interest Rates

Taming inflation without crashing the economy depends on where interest rates are set: Too low for too long, inflation tanks the economy. Too high for too long, stagnation tanks the economy.

So it goes, the decision to lower interest rates or keep them the same is like having a wolf by the ears: dangerous to hold on, dangerous to let go.

Rates are currently set in the 5.25%-5.5% range.

If keeping rates the same is “holding the wolf,” there are anecdotal and objective signs we may be reaching the point where it's less dangerous to let go.

Time to Let Go of the Wolf

Anecdotally, eight of the twelve federal reserve districts are now reporting flat to declining economic growth since October, according to the Beige Book report. This shift marks a contrast from July, August, and September when most districts were still reporting modest growth. Looking ahead, each district's overall economic outlook for the next six to twelve months has "diminished."

Objectively, job openings are down 8.1% since August and 16.6% year-over-year. Job quits and hires have been flat since July following a stretch of historic highs. Accordingly, with less options to go elsewhere and less turnover, wage growth is easing and labor productivity has increased 5.2% as of Q3.

In terms of cooling, one big exception is the shortage of skilled workers, a unique and persistent characteristic of this economy that the Wall Street Journal outlines in a spotlight on the situation in New Jersey.

Unemployment did drop from 3.9% to 3.7% in November, driven by a 1.8% decrease in unemployment among workers aged 16-19 (in 22 states, those teenagers will secure minimum wage increases at the start of 2024). Aside from that, however, there was little change in unemployment or labor force participation.

The economy also added 199,000 jobs last month. The biggest gains were in healthcare, government, and leisure and hospitality. By percentage, those three categories, led by healthcare, have grown the most this year.

However, outside of healthcare and leisure and hospitality, the private sector saw fewer job gains last month. The same is true for the entire year, as the ratio of private-to-government employees has decreased ten of the last eleven months, from 5.92:1 to 5:83:1. That marks the first decline of at least two straight months or more since January-to-April 2020, and the longest period of decline dating back to just before the start of the 2008 recession.

Job Growth and Other Observations by Industry

In professional and business services, job growth has been flat if not slightly down since August, notwithstanding gains in professional, scientific, and technical services, which are up 2.5% year-over-year.

In manufacturing, job growth and real output have been more or less flat since January other than the loss and return of 30,000 autoworkers from strike. This trend coincides with orders for durable goods dropping 5.4% in October, the third decline in four months. That doesn't mean predictions of re-shored production won't come true. To the contrary, construction spending on manufacturing facilities has increased 55% since last December, signaling a ramp up is eventually coming (on that note, semiconductor production has been ramping up since March and averaging 12% year-over-year output since July). Even so, job growth and how we measure it is likely to be altered as automation takes on a bigger role in production.

Buoyed by manufacturing and infrastructure projects, the construction industry has quietly sustained steady, incremental job growth since May 2020; this despite residential housing starts being down every month but two when compared to starts in 2022.

In retail, November sales increased 4.1% compared to this time last year, beating expectations after dipping in October. While auto sales led the way, it appears sales of general merchandise have trended down the last three months, which explains the inflationary relief for many of those items. Along those lines, retail job growth declined significantly last month (-38,000) as online spending again outpaced brick-and-mortar shopping.

All that said, given where things stand right now the Fed is aiming to lower rates into the 4.25-5.0% range next year, contingent on unemployment and inflation remaining stable.

A Look at Employment Trends in Engineering and Sciences

Actalent's monthly Labor Market & Economy Report offers a comprehensive look at labor market trends, including trends across all the industries we support: Automotive, Aerospace & Defense, Architecture & Engineering, Consumer & Industrial Products, Construction, Healthcare, Scientific R&D and Utilities.

Highlights from this month's Labor Market & Economy Report:

Unemployment rates by industry: Unemployment rates by labor category:
Overall unemployment: 3.7% Software-Hardware-IT-& Mathematics: 2.0%
Hospitals: 1.4% Architecture & Engineering: 2.2%
Utilities: 2.3% Sciences – Life, Physical, & Social: 1.3%
Professional & Technical Services: 2.6% Unemployed workers per job opening in STEM categories: 0.3
Manufacturing: 3.1%
Construction: 4.2%

Connecting the Dots

In Life Sciences, last month Casgevy, a treatment for sickle cell disease and β-thalassaemia, was approved for use in the UK, making it the first approved CRISPR gene-editing technology in the world. Casegevy was subsequently approved by the FDA for use in the U.S. on Dec. 8.

Also in Life Sciences, read about innovation within the weight-management medicine market, which Morgan Stanley has estimated could reach $77B by 2030. Learn which companies and what medicines have joined Novo Nordisk in the race following its release of Ozempic and Wegovy.

Actalent's Labor Market & Economy Report is a comprehensive look at STEM labor market trends, including trends across all the industries we support: Automotive, Aerospace & Defense, Architecture & Engineering, Consumer & Industrial Products, Construction, Healthcare, Scientific R&D and Utilities.

References: Actalent's Labor Market & Economy Report synthesizes information from a variety of sources including the United States Bureau of Labor Statistics survey results, Lightcast (formerly Emsi-Burning Glass), media reports, industry intelligence, company earnings reports, and external labor market data. The full set of data and references are included as a companion to this article.

If you'd like more information on the data presented, or have questions about the information provided in this report, please contact our team at:

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