Employers likely hired more workers and raised wages in November

A worker moves boxes of merchandise to be scanned and sent to delivery trucks during operations on Cyber ​​Monday at the Amazon Fulfillment Center in Robbinsville, New Jersey, November 29, 2021.

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Job growth is expected to be strong in November, and employers will likely continue to raise wages to attract and retain workers in a tight labor market.

Economists expect 573,000 jobs were created last month, up from 531000 in OctoberAccording to Dow Jones. The unemployment rate is expected to decline to 4.5% from 4.6%, and average hourly wages are expected to rise 0.4% on a monthly basis, or 5% on an annual basis.

“It looks like it’s been a really good month, and we’ll see if we can take it, with some pullback, which is normal with concerns about Omicron,” said Diane Sonic, chief economist at Grant Thornton. “But for now, we’re still coming off a great month, especially for travel and tourism.”

The jobs data, expected Friday at 8:30 AM ET, will be an important input for the Federal Reserve at its December 14-15 meeting. earlier this week, Federal Reserve Chairman Jerome Powell said the central bank could speed up the tapering process From the $120 billion a month bond-buying program it has put in place to support the economy during the pandemic. He said the Federal Reserve would discuss the acceleration at its December meeting.

The dual mandate of the Federal Reserve

Full employment is one of the Fed Dual statesSo, economists will be watching closely the participation rate in the November report to see if it picks up. This measure is the percentage of the qualified workforce that is either employed or actively seeking employment, and it was 61.6% in October.

Swonk expects to add 750,000 jobs above consensus in November, and expects the unemployment rate to fall to 4.4%. Sonk said wage growth should be strong, as employers try to lure workers in in the face of demand from Amazon and other employers who have raised wages.

“It’s a hot job market and there’s an increase in demand unlike anything we’ve seen before,” she said. And she indicated that job opportunities increased by 55% from the February 2020 level, according to the job site on the Internet In fact.

“There is no immigration,” she said. “It has fallen off a cliff. The pandemic has hastened retirements and hurt participation among some groups that usually need to participate more than others.” “It is far from perfect. It is a job market with a collision between rising demand and constraints on supply.”

Wage gains were likely across the board in November. “We’ll see gains on the low end, but quality professional services, really exciting,” Sonk said.

Luke Tilley, chief economist at the Wilmington Trust, expects 300,000 jobs to be created in November, based on private sector data and weekly jobless claims data.

He expects the hiring trend to be strong and will remain so.

“We expect an average of 500,000 jobs per month over the 12 months from now on, but there will be volatility, as the virus spreads and various industries fluctuate,” Tilley said.

Bigger context behind the jobs report

Tilley said the Fed will be looking for reasons behind the weak or strong jobs report, as it tries to assess what will be normal for the post-pandemic labor market. “If it is weak because there is still no supply of labour,” he said, “it is quite different for them than weak because demand is diminishing.” “I think the Fed, the Federal Open Market Committee, will probably spend more time getting their arms around what it means for a full labor market recovery.”

He said the Fed would have to adjust to a lower participation rate. “This has implications for the unemployment rate and should even be compared to the unemployment rate before the pandemic,” he said.

But the jobs report will also be judged by investors, focusing on what it means for Fed policy. Financial markets have been sensitive to any nuances that could help determine the central bank’s timetable for completing its bond purchase program, which is now expected to end in June 2022.

Once the bond buying ends, the door will be open for the Federal Reserve to raise interest rates.

Swonk was expecting the Fed to quickly reduce its bond purchases Because of higher than expected inflation, so the wages portion of the employment report will also be very important. “We’re not seeing a wage-price vortex…but that’s what the Fed fears we can get to,” she said.

David Petrosinelli, chief trader at InspereX, said the jobs report likely won’t have a significant impact on the market unless it is too strong or too weak.

“I think this market is more called upon to have a stronger number, and that tells me that prices have room to work,” he said. Petrosinelli pointed to the yield on the benchmark 10-year Treasury at 1.44% on Thursday afternoon. Returns move with the opposite price.

“You can look back last week and that was 1.70%,” he said, referring to the 10-year return. “I think that was the upper bound there. If you get a really strong number, we can go back there, albeit limited by the sideview of this new variant.”

Revenues fell sharply after initial reports of an omicron variant for Covid last Friday.

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