U.S. employers hired 266,000 additional workers last m­­­onth on net, higher than most expectations and further confirmation that employment growth remains solid. Over the last three months, payroll employment growth has averaged 205,000 new jobs, more than enough to keep up with population growth and pull in thousands of workers off the sidelines each month.

With the return of striking GM workers, manufacturing employment rose by 54,000 jobs. On average over the last three months, about 4,000 jobs were created in manufacturing. As I discussed yesterday, this represents a meaningful slowdown from 2018. Construction also continues to be softer than it was last year (growing by only 1,000 jobs in November). Retail employment grew by 2,000 jobs in November, significantly slower than September (12,000) and October (22,000). Retail employment is potentially weaker than typical at this point in the holiday season because of the late Thanksgiving.

The unemployment rate ticked down slightly to 3.5% from 3.6% in October. This is the 21st month in a row when unemployment has been at or below 4.0%. At the same time, the labor force participation rate fell slightly as the overall employment-to-population ratio held steady. The prime-age employment-to-population ratio also held steady in November, matching again its peak rate before the Great Recession began, but still significantly lower than its peak in 2000.

Unfortunately, this tightness isn’t translating into stronger wage growth. Nominal wages rose 3.1% year-over-year in November, which is slower than expected in an economy that has had historically low unemployment. Nominal wages for production/nonsupervisory workers rose significantly faster than the overall, increasing 3.7% over the year. It is important to remember that periods of stronger wage growth for production/nonsupervisory workers in this recovery tend to be followed by periods of relatively weaker growth. Definitely a promising sign if the stronger trends continue, but the slowdown for all private sector workers is still troubling.

The report suggests the Federal Reserve is doing the right thing by keeping interest rates low to ensure the longest recovery in modern economic history can be sustained—rather than peter out just as many lower- and middle-income households are starting to feel its benefits. When they meet next week, they should continue looking to the data for guidance and keep interest rates low until we reach genuine full employment.