The U.S. labor market continues to show signs of strength, as indicated by the latest employment report from the Bureau of Labor Statistics. In November, total nonfarm payroll employment increased by 199,000, and the unemployment rate edged down to 3.7 percent from 3.9 percent in October. While the growth rate is below the average monthly gain of 240,000 over the prior 12 months, it is in line with job growth in recent months. The BLS also revised the employment numbers for September and October combined, showing 35,000 fewer jobs than previously reported. 

Equities came under selling pressure in the initial reaction. The two primary catalysts for the knee jerk lower were the hotter-than-expected Hourly earnings (+0.4% MoM vs +0.2%E) and the lower-than-expected UR (3.7% vs 3.9%E). This led to a jump in 10-year interest rates from 4.12% to 4.27%. Peeling back the onion, we see a more nuanced report that bodes well for the economy. 

The job gains were primarily in the healthcare and government sectors. The healthcare industry added 77,000 jobs in November, surpassing the average monthly gain of 54,000 over the previous 12 months. The job gains were seen in ambulatory health care services, hospitals, and nursing and residential care facilities. The ongoing trend of an aging population and increased demand for health care services bodes well for the sector's continued growth.

Government employment also increased by 49,000 in November, consistent with the average monthly gain over the past 12 months. The growth was observed in both local and state government sectors. 

Manufacturing employment rose by 28,000, with 30,000 workers returning from a strike in the motor vehicles and parts industry. Despite this positive news, manufacturing employment has shown little net change over the year, indicating the sector's ongoing struggles.

Retail trade employment declined by 38,000 in November and has remained relatively stable over the year. Department stores and furniture, home furnishings, electronics, and appliance retailers experienced decreases in employment. This is a little surprising as we are coming up on the holiday period which tends to be a seasonally strong period for hiring in this space. 

In terms of wage growth, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents, or 0.4 percent, to $34.10 in November. Over the past 12 months, average hourly earnings have increased by 4.0 percent. 

As we take a deeper dive, we see an employment report that points to a strong jobs market. This helps drive the "soft landing" or "no landing" narrative. Yields have been on the decline for the past five weeks. One reason for the decline is concerns that the economy is deteriorating which would force the Fed to cut rates. Expectations for a rate cut had moved up into Q1. 

While lower rate expectations provide a temporary boost to equities, the longer-term implications, a recession, would not bode well for stocks heading into 2024.

This report helps alleviate those worries. While one data point does not give us the entire picture, the news clears another hurdle for traders as we head into the year"s end. The goldilocks economic numbers continued at 10 a.m. ET when the preliminary look at the December University of Michigan number showed a steep decline in inflation expectations. This offset the hot Hourly earnings read. 

Participants will need to navigate the CPI number on Tuesday and the Federal reserve on Wednesday but, overall, today"s news was a positive for bulls. 

In conclusion, the November employment report indicates a stable U.S. labor market, with growth in health care and government sectors, and a stabilizing public sector. The ongoing challenges in the manufacturing and retail trade sectors, however, suggest caution when considering investments in these areas. As always, it's essential to keep a close eye on future employment reports and other economic indicators to make informed investment decisions.