The US job creation engine kept humming in November, suggesting that the Federal Reserve has farther to go in slowing the economy – policymakers may have to hold rates at prevailing levels for longer.

According to data released by the Bureau of Labor Statistics this morning, 199,000 jobs were added, and the unemployment rate crept lower to 3.8 percent, heading back toward historic lows. Average hourly earnings rose 0.4 percent year-over-year, solidly topping expectations. Ahead of the release, consensus estimates had pointed to a 180,000-job gain (although the “whisper number” was likely lower) and the unemployment rate was seen holding at 3.9 percent.

The dollar is pushing toward a session high, equity futures are retracing lower, and yields are correcting upward as traders move to price in a less aggressive monetary accommodation process in 2024.

Falling unemployment moved farther away from the Sahm Rule trigger, making it unlikely – unless this cycle is very different – that the US economy is currently in recession. The rule, named after former Federal Reserve and Council of Economic Advisors economist Claudia Sahm, indicates that US recessions have historically been underway when the 3-month moving average of the national unemployment rate has risen by 0.5 percentage points or more relative to its low during the prior 12 months – and at 0.30 it has moved away from that threshold.

We would note, however, that the bulk of the marginal gains in today’s report were generated outside the private sector, with government contributing 49,000 jobs and 77,000 added in health care. The economy is still slowing, but the descent is being cushioned by public spending efforts.