US November payrolls growth hurts case for early '24 Fed cuts
NEW YORK (Reuters) — U.S. job growth accelerated in November and the unemployment rate dropped to 3.7% even as more people entered the labor force, pointing to underlying strength in the labor market.
Nonfarm payrolls increased by 199,000 jobs last month, the Labor Department's Bureau of Labor Statistics (BLS) said on Friday. Economists polled by Reuters had forecast 180,000 jobs created. About 25,300 members of the United Auto Workers (UAW) union ended their work stoppages against Detroit's «Big Three» car makers on Oct. 31, the BLS strike report showed, while 16,000 members of the SAG-AFTRA actors union returned to work.
The employment report suggested that financial market expectations that the Federal Reserve could pivot to cutting rates as soon as the first quarter of 2024 were premature.
MARKET REACTION:
STOCKS: U.S. stock futures added to a slight loss then steadied to stand 0.07% easierBONDS: U.S. Treasury 10-year yield rose to 4.231% after the report. Two-year yields rose to 4.677%
FOREX: The dollar index was up 0.24%, up a bit more than just before the data
COMMENTS:
BRYCE DOTY, SENIOR PORTFOLIO MANAGER, SIT INVEST, MINNEAPOLIS
«Continued robust jobs data will continue to bring inflation down as open positions get filled. However, the knee jerk reaction is for higher yields out of fear that the Fed may do an about face hint about raising rates again. More labor supply reduces the cost of labor which is keeping wage growth at a tame 4%. Given a 2% growth rate in productivity, companies only need to raise prices 2% to cover increased wages.»
«Solid job increases combined with wages growing faster than CPI also helps the soft landing scenario.»
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL
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