A pedestrian walks past a “Now Hiring” sign in front of a U-Haul store on December 3, 2024 in San Rafael, California.
Justin Sullivan | Getty Images
After a month in which storms and strikes effectively depressed employment, Friday’s jobs report could give a clearer picture of where the labor market is heading.
The U.S. Bureau of Labor Statistics announced Friday at 8:30 a.m. ET that nonfarm payrolls increased by 214,000 in November, up from just 12,000 in October. I plan to. The month’s employment growth was the worst since December 2020.
One of the things that makes this report so important is that it is the last comprehensive outlook the Federal Reserve will have before its next policy meeting on December 17th and 18th. is. Markets are betting the Fed will approve another quarter-point rate cut, but that could change depending on developments in the jobs report.
“Well, this should be a pretty healthy number, because (Hurricane) Milton and the (Boeing strike) suppressed employment (in October),” said Kathy Jones, chief fixed income strategist at the Schwab Center. ), he should recover.” For financial research.
In fact, October’s numbers could be even higher after BLS researchers go back and double-check that month’s data. Since the coronavirus outbreak, revisions to salary reports have sometimes been large-scale.
That could further confuse economic data in the coming months and make the Fed’s job even more difficult.
“We expect it to exceed 200,000, and if there is a real rebound, the risks will probably be to the upside,” Jones said. “But I’m also not sure that this jobs report will tell us much, because the effects of the weather are up and down. Because it really gives us a clear view of the future. Or is it just more foresight? Should I work with muddy data? ”
Important to the Fed
A clear picture is essential for the Fed as policymakers look to recalibrate policy as annual inflation rises but eases and the labor market gains increased attention. is.
Apart from the October report, the employment situation has been showing a slowing trend since around April, with an average of 128,000 new jobs being added per month while the unemployment rate rose to 4.1%. . Fed policymakers want to lower the benchmark short-term borrowing rate to a more neutral level, focusing on balancing inflation and employment.
“This is definitely going to be noisy because any disruption caused by a storm or a strike will affect two months’ worth of data: the month when people are not working and the following month when they return to work,” BNY economist Vincent said. said. Mr. Reinhart is a former Federal Reserve official who worked at the central bank for 24 years.
“The Fed’s view is that the slowdown in nonfarm payrolls during 2024 is essentially on trend, with just over 100,000 jobs created per month; There was no need to worry,” he added. “In fact, it was welcomed because the trend is sustainable.”
In fact, the latest signs show that the job market is flattening, but not getting worse.
Current state of the labor market
The number of new weekly unemployment insurance claims has remained fairly stable at around 220,000, but the number of continuing claims in early November had reached the highest level in about three years. Taken together, these numbers show that while companies are not laying off workers in large numbers, they are also not rehiring those who have lost their jobs.
Wednesday’s Federal Reserve Economic Report (the “Beige Book”) called the employment situation “sluggish as turnover remains low and few companies report adding employees.” Ta. The report said that while layoffs were “low”, employers were wary about the pace of hiring going forward, showing greater enthusiasm for entry-level workers and skilled workers.
This week’s BLS data shows the number of job openings increased in October, but hiring rates declined and voluntary resignations increased.
The Fed will need to consider all of these factors, as well as concerns about rising inflation, when setting interest rates and forecasting the future.
Reinhardt said there was no need to put further pressure on inflation if the labor market remained stable. “So the strategy is to try to get demand on trend. If growth and demand are on trend, we should maintain the status quo in the labor market, and the labor market is approximately in equilibrium,” he said. The body,” he added.
The unemployment rate is expected to rise to 4.2% due to the significant increase in employment and the expected re-employment of the workforce from October. Additionally, average hourly wages are expected to increase by 0.3% from the previous month and 3.9% from the previous year, both of which are expected to decrease slightly from the previous month.
