US adds 263K jobs, more than forecast

Far from a Goldilocks moment, #BLS November payrolls, at 263,000, came in stronger than what markets had hoped. Even when adjusting for downside revisions in prior months, it surpassed our expectations for 200,000 job gains. Wage gains surged for the month, up 0.6% for the month (another two-year high), and up a hefty 5.1% over last November. It's also hard to ignore that those wage gains have been negative in real terms for 20 straight months when including November's likely hot #cpi reading. The unemployment rate held at 3.7% but for the wrong reasons: fewer people got jobs and even more people left the labor force. With over 4 million less workers in the jobs market than its pre-crisis trend rate, it's hard to see wage pressures easing without a shock to the economy. While the #federalreserve has indicated that they may soften their stance with a possible 50-bps hike in December, November's stubbornly high wages will put the 75-bps back on the table or the elephant in the room if they stick with 50-bps. Either way, S&P Global Ratings' forecast of 5.00% to 5.25% exit funds rate seems increasingly likely. #economy #jobs S&P Global #wages

This is THE chart I look at for the US labour market… Yesterday’s NFP saw labour force participation rate ticking down slightly and still below pre-Covid levels. Importantly this shortfall will NOT be made up, contrary to expectations, because of aging demographics which is a major constraint that makes it hard for the economy to operate at current activity levels without fueling inflation. Looking further back, the last 15 years saw the US labour participation falling from 66% to 62% just due to aging, and this is happening all across the developed world and parts of EM in particular China. A lower birth rate may eventually offset some of the inflationary effect as household formation and housing demand fall – but only after the costs tied to the aging baby boom generation play out. This is why, aging demographics in addition to geopolitical fragmentation and the net zero transition, that even as inflation falls going in 2023 it will need to settle at levels higher than pre-pandemic and 3 is perhaps the new 2. The Fed will have to push ahead with rate hikes leading to recession and keep rates higher for longer to drive down inflation. Now more details on the payroll: ?? NFP change (Nov): 263k (previous 284k) vs consensus expectations of 200k. The three-month average payroll change is 272k. ?? But the big surprise in the data was not the better-than-expected payrolls gain but average hourly earnings rising 0.6% in November – double the consensus forecast – to reach a 5.1% annual rate. ?? And of course the aforementioned labour participation (Nov): 62.1% (previous 62.2%). #nfp #labormarket #fed #aging

US stock futures dropped today after a Bureau of Labor Statistics report showed employment and wages rising more than analysts had anticipated in November. The US added 263,000 jobs, while the unemployment rate remained historically low at 3.7 percent. Wages grew by 0.6 percent, double what analysts had expected, as employers continued to boost pay in order to meet demand for workers.? The jobs report follows a?Nov. 30 statement?from Federal Reserve Chair Jerome Powell indicating the agency could slow the pace of interest rate increases this month. But the recent jobs report makes a slowdown in rate hikes less likely, as wage growth, coupled with a still-tight labor market, means inflation may persist. More in Observer: https://lnkd.in/dDkAXMHf #jobsreport #bls #employment

The jobs market stayed strong last month: Employers added 263,000 jobs, while the unemployment rate held at 3.7%, near the lowest level in a half-century. Big takeaway: The labor market is still defying worries about a recession. Read more about the report, including the notable jump in average hourly earnings ??????

Good news is bad news for equities as jobs report surprises to upside The U.S. equity market is grappling with another economic catch-22. This morning’s November employment report provided good news for workers but bad news for investors hoping a slowdown in hiring would sway the Federal Reserve to moderate its tightening stance. Both payrolls and wage inflation came in hotter than expected: The economy added 263k jobs, ahead of the forecasted 200k, and average hourly earnings rose 0.6%, versus an anticipated 0.3%. The S&P 500 Index responded by falling approximately 1.5% to start Friday’s trading session. During the course of a “textbook” economic cycle, strong #employment data like this would be expected to boost equity #markets. But in the ongoing “abnormal normalization” of conditions in the late days of the Covid economy, persistent job growth and wage gains have been a thorn in the side of investors given the implications for monetary policy. As Fed Chair Jerome Powell pointed out earlier this week, labor markets remain a focal point in the central bank’s approach to fighting #inflation. The longer labor markets remain tight and wage growth elevated, the longer interest rates will need to be more restrictive to loosen conditions sufficiently. That’s bound to disappoint an equity market that rallied vigorously earlier in the week after Powell signaled a decelerating pace of rate hikes, possibly starting as early as December. Although today’s report may not meaningfully alter the currently projected 5% terminal rate for the federal funds rate, it may elongate the “higher for longer” cycle, delay a Fed “pivot” and ultimately raise the risk of recession. I had the opportunity to discuss these topics on CNBC Squawk Box with host Joe Kernan. Check out the discussion on this morning’s segment here: https://lnkd.in/g7zPaDRC Do you think today’s strong employment data may force the Fed to delay the deceleration of rate hikes it telegraphed only a few days ago? #litrendingtopics

Of course in the runup to the holidays, the biggest gain in the November jobs report was in the leisure and hospitality sector. But if you look at the big picture, this jobs report is a pandemic recovery story, said Betsey Stevenson, a University of Michigan professor and former chief economist of the U.S. Labor Department. The biggest gains were in sectors that are still trying to recover from pandemic losses, including education and health services. Here’s a look at where the jobs are – in one chart: https://cnb.cx/3EUm2xH

In a Fed-unfriendly report, payroll gains were well above the 200K estimate and the average hourly earnings increase was double the expectations. Leisure and hospitality, health care and government led the sector gainers, while retail saw a surprising drop of 30,000. No easing in sight for the Fed.

U.S. Job Report: Workers rejoiced, the Fed not at all The U.S. economy added 263,000 jobs in November, significantly above forecast as the labor market continued to defy expectation. Unemployment rate stayed at 3.7%, near all-time low. Job gains were also more than two time the required number to keep the market stable, which is around 100,000 each month, implying a heated labor market. It was a bad job report for the Fed on multiple fronts: labor participation rate dropped 0.1 ppt, wages shot up to 0.6% m/m from 0.4, and workers exiting the labor force in drove for the third month in a row. That is a recipe for a potential wage-push inflation scenario if there are more wage growth numbers like the one we saw today. The data supports our hypothesis that workers are trying to catch up with inflation by asking for higher wages via promotion and contract negotiations. The promotion cycle is often around the end of the calendar year so we should see more of these numbers soon. #labormarket #jobgrowth #inflation

Good for workers and wages, but expect another rate rise from the Fed. Canada will follow.

November job report is out. More opportunities than workers. The US economy is undergoing a fundamental shift. More manufacturing, more energy. In the next decade the free world will look to the USA as the leader in these segments. Less energy from the Middle East, less manufacturing from China. Labor shortage problem is the issue. We need to redevelop our workforce. Fed rate increases can't control that. The Federal Reserve can't solve a new problem with an antiquated solution.