The November job market report was a mixed bag. Nonfarm payrolls were in line with expectations, continuing to reflect a more moderate pace of job growth in 2016 (although still relatively strong). The unemployment rate fell to 4.6%, the lowest since August 2007, but reflecting a drop in labor force participation. Average hourly earnings edged lower, following a sharp gain in October, and the trend appears to be more moderate than what we saw a month ago. Strangely, the focus is on the factory sector, which accounts for 8.4% of payrolls.

The trend in job growth has remained moderately strong this year, albeit slower than last year. Private-sector payrolls rose 1.7% y/y in November, while manufacturing jobs fell 0.4% y/y. That weakness reflects the energy contraction, sluggish business fixed investment, and a slowdown in global economic growth.

Slack in the job market is being reduced, but much remains. How much is a key issue for Federal Reserve policymakers. The employment/population ratio is trending higher, but mostly for the key age cohort (those aged 25-54).