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GM Workers Return to November Payrolls

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Payroll employment is expected to rise by 175,000 in November, well above the 128,000 of October. Roughly 48,000 GM strikers and 12,000 workers who suffered layoffs during the GM strike are expected to have returned to payrolls during the month. The only real drag on employment should be an additional drop of 12,000 temporary workers who completed their tasks for the 2020 Census. The government is still doing background checks on thousands of workers they hope to bring on for the census early next year.

The risk is to the upside that we could see an even larger rebound in employment in November. Durable goods orders surprised to the upside in October, which could mean more gains in the heavy manufacturing sector. Optimism that we might finally come to some kind of a truce in the trade war with China has been fueling those gains.

Holiday hires are expected to remain muted as retail store closures continue. Retailers are also a bit nervous about the short length of the holiday season, as Thanksgiving came late this year. Separately, the online behemoth Amazon has announced plans to leverage robots in its warehouses this year to increase the speed with which it fills orders and limit its holiday hires.

Another category to watch is leisure and hospitality. This is where worker shortages are most acute. Maids have been particularly hard to find, which is obvious to anyone who has stayed at a hotel over the last year.

Professional hires have slowed over the last year, which showed up as weakness in the market for new college graduates. Their unemployment rate actually rose over the summer. There were some signs that things were looking up in October as hopes of some kind of detente with China rose. We need to see a much larger improvement in November to reverse the damage done to new college grads over the summer.

Average hourly earnings are expected to rise 0.3% between October and November, as higher paid auto workers return to work. That translates to a 3% year-over-year increase, which is solid but still well below the 3.4% peak hit last February. The Federal Reserve would like to see a little stronger, more sustained wage growth. Average hours worked are also expected to pick up a bit as workers returned to production lines. The increase is not likely to be enough to push overall hours worked above the levels of a year ago.

Separately, the unemployment rate is expected to hold at 3.6%. The participation rate is expected to continue to edge slightly higher. We are close to the highs prime-age participation hit before the financial crisis but still below the peak of the 1990s boom.

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