A pedestrian walks past a “Hiring Now” sign in front of a U-Haul store on December 3, 2024 in San Rafael, California.
Justin Sullivan | Getty Images
After a month of hiring largely stalled by storms and strikes, Friday’s jobs report could provide a clearer picture of where the labor market is heading.
The U.S. Bureau of Labor Statistics is expected to report at 8:30 a.m. ET on Friday that nonfarm payrolls increased by 214,000 jobs in November, up from a meager 12,000 jobs in October. The month’s job growth data was the worst since December 2020.
One of the reasons that makes the report so critical is that it will be the last comprehensive report the Fed gets before its next policy meeting on December 17-18. There are strong bets that the Fed will approve another 25 percentage point rate cut, but that could change depending on how the jobs data performs.
“Well, it should be a pretty healthy number because it should bounce back from (October), when we had (Hurricane) Milton and the (Boeing strike),” said Casey Jones, chief fixed income strategist at the Schwab Center. Jobs are restricted.
In fact, October’s numbers may be higher after BLS investigators go back and re-examine October’s data. In the post-pandemic period, revisions to employment reports can sometimes be large.
That could muddy months of economic data and make the Fed’s job more challenging.
“I would expect it to go over 200,000, and if we do rebound, the risk could go up,” Jones said. “But I’m not sure the jobs report tells us much, because the weather can be a hit or miss. Does it really give us a clear view of the future, or does it just give us a more detailed view of the future? Do you know much?
Very important to the Fed
Now, it’s crucial for policymakers to get clarity from the Fed The recalibration of policy comes at a time when annual inflation is rising but slowing, with greater focus on the labor market.
With the exception of the October report, employment has been slowing since around April, with an average of about 128,000 new jobs per month, and the unemployment rate has risen to 4.1%. Fed policymakers want to lower the benchmark short-term borrowing rate to a more neutral level to balance concerns between inflation and employment.
“It’s definitely going to be noisy because the storms and strike disruptions will affect both months of data, both the month people were off the job and the month people returned to work the next month,” said Vinson, an economist at the Bank of New York. Reinhart He is a former Federal Reserve official who served in the Federal Reserve Board for 24 years.
“The Fed believes that slowing non-farm job growth in 2024 is basically on trend – the trend is towards just over 100,000 jobs per month – and that’s not alarming,” he added. “That’s actually not concerning.” It’s popular because, you know, the trend is sustainable.”
In fact, recent signs suggest the job market is stabilizing but not deteriorating.
labor market conditions
Weekly initial jobless claims have remained fairly steady around 220,000, although continuing claims in early November reached their highest level in about three years. Taken together, these numbers suggest that companies are not laying off large-scale layoffs or rehiring those who lost their jobs.
An economic report released by the Federal Reserve on Wednesday — its “Beige Book” summary of current conditions — described hiring as “suffering as worker turnover remains low and few companies report adding headcount. inhibit”. The report said the layoff rate was “low,” but employers were cautious about the pace of future hiring and more enthusiastic about entry-level and skilled workers.
The Fed must weigh all of these factors, plus concerns about rising inflation, when making interest rate decisions and laying out its outlook for the future.
Reinhart said that if the labor market can remain stable, it should not put additional pressure on inflation. “So the strategy is, try to keep demand on trend, because if growth and demand are on trend, then you should keep the current state of the labor market, the labor market roughly in balance,” he added.
In addition to overall employment growth, the unemployment rate is expected to rise to 4.2% as the workforce re-enters the labor market starting in October. In addition, average hourly earnings are expected to increase by 0.3% from last month and 3.9% from the previous month, both of which are slightly lower than last month.
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