Employers likely hired more workers and boosted wages in November
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One worker transports boxes of merchandise to be scanned by Amazon and then sent to delivery trucks. This was Cyber Monday in Robbinsville (New Jersey), November 29, 2021.
Mike Segar | Reuters
Expect strong job growth in November. In an extremely competitive labor market, employers are likely to continue to increase wages to keep workers.
Economic experts expect that 573,000 additional jobs will be created this month. That’s up from 531,000 in OctoberDow Jones reports that the unemployment rate is now 4.5% from 4.6%. Expectedly, unemployment rates will be lower at 4.5% than 4.6%. Average hourly earnings are also expected to increase by 0.4% per month, or 5% annually.
It looks like it’s been a great month. With some pullback that is normal with concern about omicron, we will see if it can be sustained,” stated Diane Swonk chief economist at Grant Thornton. But at this moment we are still reeling from an extraordinary month, particularly for travel and tourism.
At 8:30 AM Friday, data on jobs is expected. ET will provide important information for the Federal Reserve’s Dec. 14-15 meeting. This week was earlier. Fed Chairman Jerome Powell said the central bank could speed up the taperingIts $120 billion per month bond-buying programme, which was put into place in order to support the economy during the Pandemic. He stated that the Fed will be discussing acceleration at its December meeting.
Fed’s double mandate
One of the Fed’s goals is full employment dual mandatesEconomists will closely monitor the November report’s participation rate to determine if it increases. It is the percent of eligible workers who are employed or seeking work. In October, it was at 61.6%.
Swonk predicts 750,000 new jobs in November. The unemployment rate will drop to 4.4%. Swonk stated that wage growth is expected to be steady as employers try to recruit workers in response Amazon’s demand and other employers who have increased wages.
She said, “It is a hot market for jobs and there’s an unprecedented surge in demand like none we have ever seen.” She pointed out that there are 55% more job opportunities than the February 2020 level according to the website for jobs. Indeed.
“There is no immigration. The world has fallen from a cliff. She said that the pandemic had accelerated retirements, and affected participation in some groups who normally have to take part the most. But it’s still not perfect. This is because there’s an unforeseen combination of increased demand and tighter supply in the jobs market.
In November, wage gains were expected across all sectors. Swonk indicated that gains will occur at the lowest end but professional services is hotter.
Luke Tilley (chief economist, Wilmington Trust) expects that 300,000.0 jobs will be created in November based upon private sector data as well as weekly unemployment claims data.
He predicts that there will be a strong trend of hiring and it will stay so.
Tilley stated that while we expect 500,000 new jobs each month over the next 12 months, there will be fluctuations due to viruses and other factors.
The jobs report has more context
Tilley stated that the Fed would examine the causes of the weakening or strengthening jobs reports as part of its efforts to determine what is normal in the post-pandemic labor market. He said, “If the report is weak due to a lack of labor supply it will be very different from weakness as demand is petering.” I believe the Fed and the FOMC are spending more time trying to understand what a complete recovery in the labor market means.
According to him, the Fed would have to adapt to lower participation rates. He said that this has consequences for the unemployment rate. It should even be compared to pre-pandemic rates.
Investors will be evaluating the employment report, as well as analyzing its implications for Fed policy. Any nuances that may help to determine when the central bank will complete its bond-buying program are being taken into consideration by financial markets. This is now expected to be completed in June 2022.
After the end of bond purchases, it would become possible for the Fed’s to increase interest rates.
Swonk has been expecting the Fed to speed up the tapering of its bond purchasesBecause of high inflation expectations, it will be important to include the wage report in the employment report. She stated that although we are not experiencing a spiral in wage prices, the Fed worries about what they might get.
InspereX Senior Trader David Petrosinelli stated that the markets will likely not be affected by the employment report unless the data is extremely strong or weak.
His words were: “I believe this market is far more prepared for a stronger number. That tells me that rates still have room to run.” Petrosinelli highlighted the benchmark 10-year Treasury yield at 1.4%, Thursday afternoon. Yields are linked to price.
He said that the yield on a 10-year loan was at 1.70%. “You can go back to last week, and that’s 1.70%.” I believe that’s the upper limit. We could return to that level if you have a strong number but we would be limited by this sideshow.
After initial Covid reports last Friday, yields dropped sharply.
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