Both economists and investors expect the November jobs report to be a bit peppier than October’s due to the resolution of major national strikes. The anticipated bump in jobs, however, is unlikely to trigger a rate hike at next week’s Federal Open Market Committee meeting.
The U.S. added 172,500 jobs in November, according to economists surveyed by FactSet. The range of projections is wide:
Morgan Stanley
estimates 200,000 jobs were added last month, while José Torres, senior economist at Interactive Brokers, estimates 140,000.
Those estimates are higher than the 150,000 jobs logged in October, though the October number may shift with revisions. Because of slower employer participation, the Bureau of Labor Statistics has been making revisions to recent jobs figures.
Barring any surprises, Friday’s jobs report shouldn’t dramatically impact the outlook for the Fed’s rate decision next Wednesday. The likelihood that the Fed will keep its target rate at 5.25%–5.5% is currently at 97.3% as of Thursday morning, according to the CME FedWatch Tool.
Most of the bump in November’s payrolls is expected to come from the resolution of both the Hollywood actors strike and the United Auto Workers work stoppage. The SAG-AFTRA strikes included 16,000 workers and the UAW work stoppage encompassed 25,300 employees, according to the Bureau of Labor Statistics’ strike activity report during the November pay period. The total number of affected workers is likely higher, however, thanks to the ripple effects of idle auto plants and stalled studio production.
The strikes were largely resolved by the time the Bureau fielded its survey in mid-November, but full ratification of the labor contracts at issue didn’t occur until after. That could mean the effects may spill over into the December jobs report as well.
That bump is likely a short-term effect and there’s solid evidence the labor market momentum is gradually cooling. “Over the last six months job growth has been moderating,” says Kory Kantenga, senior economist for LinkedIn. Nationally, across all industries, LinkedIn’s data show hiring is down 4.9% in November 2023 compared to October 2023. The latest Job Openings and Labor Turnover Survey released Tuesday showed a significacdc_041578ac0fb6aa3070a5ab28nt decline in job openings in October as well.
Friday’s report could have other signs of continued easing in the labor market. The unemployment rate is expected to hold at 3.9% in November. Unemployment ticked up in October, with economists attributing the rise to more Americans looking for work. The October JOLTs report also showed that layoff rates remained historically low and the number of hires remained consistent month to month.
The U.S. job market has moved away from the so-called Great Reshuffle where employees en masse quit jobs and has entered a period of fewer quits, hires, and layoffs, writes Thierry Wizman, Macquarie’s global FX and interest rates strategist. He adds that this new period will probably generate lower wage growth.
Hourly earnings are expected to show continued moderation in November, with economists predicting a 4% year-over-year increase in wage growth. Wage gains, which recorded a year-over-year increase of 4.1% in October, have been down significantly in recent months from the peak of 5.9% seen in March 2022.
The ADP National Employment Report, released Wednesday, recorded another slowdown in private payroll growth in November. People who changed jobs in the month saw pay gains of 8.3%, the smallest year-over-year increase since June 2021. While the ADP report doesn’t always correspond to the Bureau’s data, both reports have been showing cooler wage growth.
The number of hours worked in November could remain steady or even trend lower. This data point is typically seen as an indicator of business growth. In October, the average workweek for all employees on private nonfarm payrolls edged down to 34.3 hours. That’s down from the high of 35 hours hit in January 2021.
The Bureau of Labor Statistics will release the November jobs report at 8:30 a.m.
Write to Megan Leonhardt at megan.leonhardt@barrons.com
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