A closely watched measure of underlying inflation rose 2% for a second straight quarter.
Private payrolls increased 164,000 last month, the most since August, a new report says.
Economists don't expect rate cuts until mid-2024, but the markets see the easing cycle starting sooner.
The Fed's preferred gauge of underlying inflation advanced 3.2%.
Despite the decline, continuing claims are still elevated amid growing evidence of a cooling labor market.
The 30-year fixed mortgage contract rate fell 20 basis points in the week ended December 1.
Manufacturers reduced head count to the lowest level since early 2022.
The decline was broad-based across sectors.
The latest figures are consistent with expectations that the economy will moderate in the fourth quarter.
They now see the central bank keeping interest rates higher through the end of 2025.