The recently released November jobs report indicates that the U.S. economy experienced a gain of 199,000 positions last month, leading to a decrease in the unemployment rate from 3.9% to 3.7%.
Economists surveyed by the Wall Street Journal had predicted an increase of 190,000 jobs and anticipated the unemployment rate to remain at 3.9%.
Here are some initial reactions from economists and analysts, shedding light on what this jobs report means for the Federal Reserve as they consider their approach to interest-rate hikes. It is worth noting that the main U.S. stock indexes (SPX ES00, -0.22%) are expected to trade lower following this unexpectedly positive data for nonfarm payrolls, also known as NFP.
1. Jason Furman, Harvard economics professor and former Obama economic adviser, tweeted:
"Overall this suggests a bit less recession risk than you might have thought... & a bit more inflation risk. But really only a bit of each — with soft landing dominant."
2. Ali Jaffery, senior economist at CIBC Capital Markets, shared the following insights in a note:
The jobs report has painted a promising picture for the U.S. economy, highlighting a strong overall performance with signs of accelerated wage growth and a decreasing unemployment rate. As the Federal Open Market Committee deliberates on future interest-rate hikes, these findings will undoubtedly play a significant role in their decision-making process.
Economic Outlook: Jobs Growth Shows Resilience
A recent report on jobs growth in the United States has provided further evidence of the economy's ability to weather the storm of potential recession. As we approach 2024, experts anticipate that interest rates will remain high for the time being. However, there is hope that the Federal Reserve may begin to decrease rates around the middle of the year. This move would bring much-needed relief to American consumers burdened by borrowing costs.
According to Steve Rick, chief economist at TruStage, "This month's strong jobs growth is yet another sign the economy is persevering as fears of a recession are lessening." Rick's optimism indicates a positive outlook heading into the new year.
Moreover, Jesse Wheeler, senior economist at Morning Consult, emphasizes the continuing strength of the U.S. labor market. While acknowledging a slight cooling off in recent months, Wheeler affirms that job growth remains robust when compared to historical standards. The unemployment rate, currently at 3.7%, reflects an economy where the vast majority of job seekers are finding employment opportunities. Wheeler also notes that nominal wage growth aligns with the Federal Reserve's target inflation rate of 2%.
However, not all experts are equally positive in their assessments. Paul Ashworth, chief North America economist at Capital Economics, points out that the 199,000 increase in November payroll employment includes workers returning from strikes. Without this one-off boost, the actual gain of 152,000 jobs is similar to October's muted increase. Ashworth acknowledges weakening trend employment growth, particularly in cyclical sectors, but reassures that there are no indications of a labor market capitulation. While he predicts that the U.S. economy will narrowly avoid a recession, Ashworth expects the Federal Reserve to shift towards rate cuts in the spring as core inflation normalizes.
In conclusion, despite differing perspectives on specific details, experts agree that the recent jobs report demonstrates the resilience of the U.S. economy. While challenges and uncertainties lie ahead, both workers and consumers can find encouragement in the overall strength and stability of the labor market.