November Employment Report Shows U.S. Economy Added 263,000 Jobs

Average hourly earnings grew 5.1% in November from a year earlier, the department said. Wage growth has remained elevated but roughly stable after a sharp increase earlier in the year.

November job growth was roughly in line with the previous three months, when payrolls grew an average of 282,000 a month. Job growth continues to exceed the 2019 monthly average of 164,000, though gains have slowed from the first half of the year.

The job market has remained resilient this year, with employers still seeking to hire despite an uncertain economic outlook and elevated recession fears. Low unemployment and wage gains have helped fuel consumer spending, the economy’s main engine.

One big question is how long that strength can last as the Federal Reserve aggressively raises interest rates to tame inflation. Some companies in technology, entertainment and real estate are laying off workers, but demand for workers continues to outpace the number of unemployed people looking for work.

Economists are concerned that higher interest rates will trigger more widespread layoffs and a recession in the next year, as has typically occurred during prior episodes of rapid rate rises. They are closely monitoring the pace of hiring for early signs of shifts in labor-market momentum.

“An employer is going to start reducing hiring long before they start letting go of their existing workforce,” said Guy Berger, principal economist at LinkedIn. “That’s the first lever.” 

Rising unemployment could follow, he said, as job seekers have fewer available opportunities. Continuing claims, which reflect the number of people seeking ongoing unemployment benefits, are drifting upward in a sign of labor-market cooling, Mr. Berger said. 

On Wednesday, Federal Reserve Chair

Jerome Powell

indicated the central bank is on track to raise interest rates by a half-percentage point at its next meeting, scaling back from an unprecedented series of four 0.75-point rate rises. Fed officials are hoping higher rates will trigger less competition for workers and slower wage increases, taking some pressure off consumer prices. 

This week, CNN said it was laying off employees and DoorDash Inc. said it would trim its corporate staffing levels by about 1,250. AMC Networks Inc. said in a memo to employees that it plans to lay off about 20% of its U.S. workforce. 

Corporate layoff announcements generally have been concentrated in the technology industry and sectors of the economy sensitive to interest rates such as housing and finance. Other businesses are quickly scooping up laid-off workers as job openings remain well above prepandemic levels, even in sectors such as real estate.

LodeStar Software Solutions, a small software company that helps mortgage lenders accurately disclose fees to consumers, recently posted an opening for a customer-service role, said Jim Paolino, chief executive of the Conshohocken, Pa.-based company.

Mr. Paolino quickly received about 130 résumés for the job, which entails account management. He held screening calls with 10 applicants, eight of whom had lost their jobs at mortgage companies. 

“It’s actually a great time to hire right now,” he said. “There has been an influx of talent in our industry and to the market because a lot of larger companies have done pretty large-scale layoffs.”

Companies are still largely avoiding job cuts because demand for goods and services is solid. Personal spending increased 0.8% from the prior month, the Commerce Department said Thursday. 

Some firms also are hesitant to lay off employees because they found it so difficult to rehire as the economy recovered from the pandemic downturn.

“Demand restarted, and they couldn’t hire fast enough,” said

Becky Frankiewicz,

president and chief commercial officer of staffing firm

ManpowerGroup.

“There’s still this aftershock of, ‘I want to hold on to the talent that I have.’”

Companies are still offering hiring bonuses to attract talent, but the rationale has shifted some from a year ago. Employers are expecting inflation to come down and bonuses give them more flexibility to dial back compensation than wage increases do, she said. 

“If you still have a talent shortage and you don’t want to lock in at higher wages across all your roles, what do you do? You do bonuses,” Ms. Frankiewicz said.

Wage growth has cooled in recent months but remains above the prepandemic pace.

Still, there are signs that spending could be reaching a limit, with some Americans dipping into savings or taking on credit-card debt to finance purchases. The personal-saving rate was 2.3% in October, its lowest level since 2.1% in July 2005.

David Blake, president of Iowa-based Blue-9 Pet Products, said sales have been roughly flat this year, a shift from previous years when the 10-person manufacturer and seller of dog-training accessories posted double-digit sales growth. 

Pet owners appear to be cutting back on some discretionary purchases as they face higher prices for staples like groceries, he said.

“Whether we’re in a recession or going to have a recession or not, the fact still remains that the inflation out there is having an impact on spending,” said Mr. Blake.

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

Due to slower sales, Mr. Blake held off on hiring new employees this year. He also doesn’t plan to add any next year.