The US Department of Labor announced on Friday (2nd) that 263,000 new non-agricultural jobs were added in November, well above the 200,000 expected by the market, and the previous revised value of 284,000. Market expectations are still near 50-year lows. It is worth noting that the growth rate of average hourly wages accelerated in November, the highest since January of this year, indicating that stubborn inflation increases the possibility of further interest rate hikes by the Federal Reserve.
Although the Fed has repeatedly raised interest rates aggressively, the US job market is still tight. At the same time, the monthly growth rate of hourly wages has reached a new high in almost a year, which meaning that the Fed needs to continue raising interest rates to curb inflation Among them, wage inflation is the most urgent problem to solve The problem is that the Fed could increase the final interest rate further.
November non-farm payrolls report:
- Non-agricultural new employment reported 263,000, expected 200,000, and a revised prior of 284,000
- Unemployment rate was reported at 3.7%, expected 3.7%, the previous value of 3.7%
- Average weekly working week 34.4 hours, expected 34.5 hours, previous value 34.5 hours
- Annual growth in average hourly earnings was reported at 5.1%, compared to 4.6% expected and 4.9% previously
- Hourly wages rose an average of 0.6% monthly, compared with an expected 0.3% and 0.5% previously
- Labor participation rate reported at 62.1%, expected 62.3%, previous value 62.2%
This is the seventh consecutive non-agricultural report this year that has exceeded market expectations. The monthly non-agricultural employment average this year is 392,000, compared to 562,000 per month last year.
This year’s nonfarm payrolls report exceeded market expectations for the seventh time in a row. (Image: ZeroHedge)
Looking at the analysis of the data, the leisure and hospitality, health insurance and government sectors posted the biggest increase in new jobs in November, while a decrease in employment was seen in retail, shipping and warehousing.
Specifically, health care added 45,000 jobs, leisure and entertainment and restaurants increased by 88,000; employment in the government sector increased by 42,000, mainly from local governments; other employment in the service industry increased by 24,000 people.
Social assistance added 23,000 jobs, back to February 2020 levels; construction added 20,000 jobs, rising; knowledge jobs rose by 19,000; manufacturing and finance were new Employment increased by 14,000, and professional and service industries increased by 6,000; retail, transportation and warehousing decreased by 30,000 and 15,000, respectively.
Average hourly wages soar, spiraling pressures of inflation intensify
The report shows that wages rose significantly in November, with average hourly wages increasing by 0.6% to US$32.82, well above market expectations of 0.3%, and higher than r revised previous value of 0.5%. Each year, wages increased by 5.1. % in November, It was above market expectations of 4.6%, but below the revised 5.6%.
For the Fed, the large unexpected increase in average wage growth is clearly bad news, meaning that inflationary pressures have increased. At the same time, this is still some distance from the Fed’s hope to see wage growth slowing to the pre-epidemic 2% to 3%. Fed Chairman Powell pointed out in a recent speech that strong wage growth is a good thing, but to make wage growth sustainable, it needs to be consistent with 2% inflation.
Fitch said nonfarm payrolls continued to grow at such a pace that it would do nothing to ease the Fed’s concerns about a labor supply imbalance.
The unemployment rate was held at 3.7%, the labor force participation rate fell slightly
The report showed that the unemployment rate remained at 3.7% in November, in line with market expectations and in line with the previous value, close to a low of 50. Since March this year, the rate unemployment has been varying within a narrow range of 3.5% to 3.7%.
The labor participation rate fell slightly to 62.1% in November, below market expectations of 62.3%, and the previous value was 62.2% Average weekly working hours for the month fell by 0.1 to 34.4 hours.
expert opinion
Matt Maley, chief market strategist at Miller Tabak, said the main issue facing the Fed is wage inflation. The average hourly wage data in the report was well above expectations, indicating that policy will Fed tightening lasts longer.
Hussain Mehdi, macro and investment strategist at HSBC Asset Management, said the good news of strong labor market data was bad news for the market, coupled with the overall resilience of the US economy and tenacious core inflation, it is difficult to’ r outside. world to think that the Fed can be in the market There is no justification for speculating about a pause in the rate increase in January or February next year.
Callie Cox, US investment analyst at eToro, said the November non-farm payrolls report was encouraging for the general public, but not for the Fed, which is desperately trying to control inflation. He further said that the labor market is the engine of economic growth, so the US economy has not gone into recession yet, but the strong employment data has given the Fed support to maintain higher interest rates for a longer period of time, until even if it is starting to slow down interest rate increases.
Responding to the Market
After the announcement, the four major US stock indexes opened lower, while US Treasury yields and the US dollar index fell. Of the session, the decline of the main indices was narrower than that obtained at the opening, 30 points or almost 0.8%, the Philadelphia Semiconductor Index fell almost 2.3%. The US 10-year bond yield and the US dollar index continued to rise, rising to 3.605% and 105.11 respectively by the end of the US stock market.
According to CME’s FedWatch Tool, the US federal funds rate futures market estimates the probability of a 2-yard interest rate hike (50 basis points) in December at 77%, and the probability of a 3-yard interest rate hike (75 basis point). ) is 23% %, the final interest rate falls in the range of 4.75% to 5%.
