American businesses and employers created more jobs than expected in November, and the unemployment rate unexpectedly fell by two-tenths, from 3.9% to 3.7%, which reinforces the thesis that the Federal Reserve (Fed) will maintain higher interest rates for longer and temporarily eliminates the idea that it should make short-term rate cuts.
According to the Bureau of Labor Statistics report released on Friday, non-farm payrolls increased by 199,000 people last month after an advance of 150,000 in October. The return of striking auto workers at Ford, General Motors, and Chrysler helped increase the number by about 30,000 people.
With several job creations not too far from the predictions, economists call attention to the unemployment rate in the report, which dropped to 3.7% with an increase in labor participation to 62.8%. In other words, showing stability once again is surprising for the better but has a negative meaning for monetary policy.
In addition, wage growth exceeded expectations after growing 0.4% in November, one-tenth more than the consensus estimate. This data and the low unemployment rate provide little argument for the Fed to dare an early rate cut in 2024. It also gives little room for improvement to update its forecasts for upward macroeconomic indicators for September.
According to the report, healthcare, entertainment and hospitality, and government contracting, in addition to the increase in manufacturing after the resolution of the United Auto Workers strike (Aww), drove the increase in jobs. Some categories show weak growth or outright decline, such as retail and fashion textiles.
facilitating job creation, contrary to recent reports showing a slower pace of hiring, a result favored by the Fed because it helps contain demand and moderate price pressure. This is amazing The stability supports Fed policymakers’ desire to keep debt costs high to ensure that inflation returns to its goal of about 2% for the medium term.
It is widely expected that the officials of the Fed will keep rates at their highest levels in two decades in their next meeting (5.25–5.5%). The president of the central bank, Jerome Powell, has repeatedly rejected growing bets on rate cuts as early as 2024, stressing that policymakers will act cautiously but retain the option of raising rates again.
Loss US Treasury yields rose sharply and prices fell after investors reacted to the sale of debt after knowing the numbers. her Interest on the 10-year bond rose to 4.23%, ending several weeks of sharp declines. On Wall Street, indices point to opening declines in the stock market for the same reason. The futures of the S&P 500 and the Nasdaq registered a fall by half a percentage point this time.