Dante DeAntonio, Senior Director of Economic Research at Moody's Analytics, joins the hosts to dive into the latest U.S. employment report for November. They discuss the job market's recovery after recent disruptions and its implications for monetary policy. The conversation highlights concerns around wage growth and inflation while maintaining an optimistic outlook for productivity. Insights into the reliability of job market statistics and the impact of rising unemployment rates in certain communities add depth, concluding with speculations on future economic trends.
The November jobs report shows a solid recovery with 227,000 jobs added, indicating resilience after previous market volatility.
Concerns about inflation arise from wage growth, yet optimism persists due to productivity keeping pace and steady consumer spending.
Deep dives
November Jobs Report Highlights
The November jobs report reveals a solid rebound in employment, with 227,000 jobs added and private sector growth nearing 200,000. This recovery follows chaotic conditions in October due to strikes and hurricanes. The three-month average job growth rose to 173,000, illustrating a return to expected trends, with key industries like healthcare and leisure and hospitality leading the charge. While manufacturing saw a slight increase, retail employment faced a significant dip, down 28,000 jobs, which may be attributed to seasonal adjustment complexities.
Wages and Employment Dynamics
Average hourly earnings increased by 0.4%, maintaining a year-over-year growth rate of 4%, which has raised discussions regarding potential inflationary pressures. Despite these wage increases, perspectives remain largely optimistic, as productivity growth has often kept pace, suggesting that current wage growth is manageable in the context of economic stability. The labor market overall continues to exhibit resilience, evidenced by stable average weekly hours and a robust job openings rate. Meanwhile, the slight uptick in the unemployment rate to 4.2% reflects declines in the household employment survey, which tends to fluctuate and does not necessarily indicate a deteriorating labor market.
Labor Market Sentiment and Future Outlook
Overall sentiment regarding the labor market remains positive, as November’s figures seem to indicate that October’s slowdown was a temporary anomaly rather than a sign of an underlying trend shift. Analysts observe that job growth, combined with stable wage increases, supports sustained consumer spending which benefits the overall economy. However, some concern arises from disparities in employment figures across different demographics, particularly with black unemployment rising by 0.7%. Despite these nuances, the consensus remains that the labor market is healthy and has not changed significantly.
Federal Reserve Policy Considerations
Investors are largely anticipating a rate cut from the Federal Reserve in December following the latest employment report, with a 90% probability of a reduction in the federal funds rate. Discussions among economists highlight the complexity of current financial conditions, as easing in some areas contrasts with high mortgage rates and tight bank lending standards. The Fed is expected to balance its response to ensure that economic growth remains on track while also managing inflation concerns. As uncertainties regarding new economic policies under the incoming administration loom, it is anticipated that the Fed may adopt a wait-and-see approach before making further adjustments to monetary policy.
With Marisa out on assignment, Dante joins Mark and Cris to discuss the latest U.S. employment report. After several volatile months due to hurricanes and labor strikes, the job market found its footing in November, with payroll growth reported across most industries. The team considers the report's implications for monetary policy and the long-run interest rate outlook. With all of the policy unknowns, they conclude that the only certainty is uncertainty.
Guest: Dante DeAntonio, Senior Director of Economic Research, Moody's Analytics
Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, and Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s Analytics
Follow Mark Zandi on 'X' @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn
Questions or Comments, please email us at helpeconomy@moodys.com. We would love to hear from you.
To stay informed and follow the insights of Moody's Analytics economists, visit Economic View.
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