Amazon workers deliver packages on Cyber Monday in New York, US, on Monday, Nov. 27, 2023.
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At a time when the economy is supposed to be slowing, Friday’s jobs report is expected to show that employers actually picked up the hiring pace in November.
Not that there’s anything wrong with that. A growing economy is a good thing, and nothing underpins that better than a solid labor market. Economists surveyed by Dow Jones expect the Labor Department to report that nonfarm payrolls expanded by 190,000 last month, up from the 150,000 in October.
But investors and policymakers have been expecting things to slow down enough to at least allow the Federal Reserve to call an end to this cycle of interest rate hikes as inflation ebbs and the supply-demand mismatch in employment evens out.
A hot jobs report could undermine that confidence, and put a damper on what has been a buoyant mood on Wall Street.
“There’s some risk to the upside because of the returning auto workers who were on strike,” said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research. “So it looks like a steady but slowing jobs market.”
Payroll growth has averaged 204,000 over the past three months, a solid gain though well below the 342,000 level for the same period in 2022. The unemployment rate over the past 12 months, however, has risen just 0.2 percentage point to 3.9%, elevated from where it was earlier in the year but still characteristic of a robust economy.
However, there are a number of dynamics at play in the current picture that make this week’s report, which will be released at 8:30 a.m. ET, potentially critical.
Wage growth and inflation
Probably the most important data point outside the headline numbers will be wages.
Average hourly earnings are expected to show acceleration of 0.3% from October and 4% over the 12-month period, according to Dow Jones.
The yearly average hourly earnings level is not consistent with the Fed’s 2%…
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