The US November jobs report showed that the economy created 155K new jobs, below the 195K of market consensus. Although softer than expected, analysts at Wells Fargo, still expect the Federal Reserve to raise rates in December as the labor market continues to tighten on trend.
“Average hourly earnings rose 0.2% compared to an expected rise of 0.3%, and October’s gain was revised down a tick. Nevertheless, wages are up 3.1% over the past year versus 2.5% this time a year ago. A dip in the workweek and a slower pace of hiring, however, point to a near-term weakening in income growth.”
“Today’s report points to some softening in the labor market, consistent with the uptick in jobless claims over the past month. While the rise in claims may partly be due to recent natural disasters and difficulty with seasonal adjustment around the early Thanksgiving, it may be an early signal that the benefits from fiscal stimulus earlier this year are starting to fade and the trade environment is beginning to weigh on growth.”
“The upward trend in wage growth is consistent with a labor market that continues to tighten. We still anticipate the FOMC will raise the fed funds rate at its upcoming meeting on December 19, but if the softening is the start of a slower trend, the Fed may dial back its path for the upcoming year.”