Economists surveyed by FactSet forecast that the November jobs report, set for release Friday morning, will show that the economy added 220,000 new jobs in the month. And that the unemployment rate ticked higher to 3.8% from 3.7% in October
If that forecast is correct, it would, probably, be enough to keep Wall Street convinced that the Federal Reserve will raise interest rates by only 50 basis points at its December 14 meeting and that the U.S. central bank is on track to wind down this cycle of interest rate increases in early 2023.
And that would be enough to keep this year-end rally going until financial markets see their next reality test from the Fed’s December 14 meeting.
An economy that added 220,000 jobs wouldn’t be especially weak–the economy was adding an average of just 190,000 jobs a month in the five years before the Pandemic–but the jobs total would be a distinct drop from 261,000 in October. And it would bring the three-month moving average for job gains to 265,000 or so. And that would be a huge move lower from the 350,000 moving average in June.
The other number to look at on Friday is the increase in average hourly earnings. In October, average hourly earnings rose 0.4%, up from a 0.3% increase in September. In October, though, average hourly earnings rose by 4.7% year-over-year. That was down from a 5.0% annual rate in September.
The Fed will be looking to see if that easing of upward wage pressure continued in November. That would give the central bank more evidence that the job market is cooling.
(A slide in the rate of wage growth would, however, be a problem for workers and the consumer economy. If wage increases slow before the inflation rate does, that would put more pressure on family budgets that are currently showing signs of stress.)
