Preview: U.S. November employment statistics, scheduled to be announced tomorrow night. Is a rate cut by the Federal Reserve in December just around the corner?

Non-farm private sector employment in the USA in November.andunemployment rate、Japan time on Friday, December 6, 2024, at 22:30.It is scheduled to be announced. The market is expected to increase by 0.16 million people, 4.2%.

Last month's October employment statistics showed a weak trend. The increase in non-farm payroll employment decelerated rapidly due to hurricanes and strikes. Jason Schenker of Forbes expects an increase in employment and a recovery in the number of employees in the November employment statistics, while also anticipating a further rise in the unemployment rate.

The October employment statistics showed a significant weakness in the labor market.
In the October employment statistics, the number of non-farm employees only increased by 12,000, highlighting a significant weakness in the labor market. Furthermore, past employment statistics were revised downward by 112,000. On the other hand, the unemployment rate remained unchanged at 4.1%.

The weakness in the labor market is attributed to Hurricane 'Helene' and 'Milton' as well as labor strikes, but it is unclear how much of this slowdown is due to these factors. The Bureau of Labor Statistics (BLS) acknowledges the impact of hurricanes, but states that it cannot accurately calculate the net impact on employment estimates.

Despite the weak employment statistics, concerns about an economic downturn did not increase. This is because there were specific circumstances behind the slowdown in the increase in non-farm employees. Uncertainties regarding the impact of hurricanes influenced this perspective.

There is a high possibility of improvement in the number of non-farm employees in November. However, if the figures do not improve significantly, there is a possibility of concerns about a gentle economic slowdown, known as a 'soft landing' or 'no landing' scenario.

The November employment statistics scheduled to be released tomorrow night (Friday) will be an important indicator to determine whether the labor market is recovering or if the economic slowdown is deepening.

November, a recovery in employment data?
November's employment statistics are expected to show a significant recovery as the impact of strikes and storms subsides, and workers return.

Economists at various institutions predict an increase in employment from 0.16 million to 0.25 million, with sectors such as government, education, and manufacturing expected to make major contributions.

On the other hand, due to the delayed impact of Thanksgiving and Black Friday, employment in the retail trade sector is somewhat restrained, and there are suggestions that the total number may fall below expectations.

Recent Statements from FRB Officials
Recent statements from FRB officials indicate a cautious yet neutral stance towards transitioning to a moderate interest rate policy. John Williams, President of the Federal Reserve Bank of New York, highlighted the importance of data-driven decisions towards a balanced economic outlook, mentioning the potential need for further rate cuts and the possibility of easing inflationary pressures in the labor market over time even with inflation rates above the 2% target set by the FRB.

FRB Governor Christopher Waller also expressed intention to support an additional rate cut in December due to concerns about stable labor market conditions and sustained inflation. Waller pointed out that recent data suggests inflation may exceed the target level, but there is no significant price increase observed in major service sectors, implying the need for policy adjustments to maintain economic balance while slightly easing constraints.

FRB Chair Powell touched on transitioning to neutral interest rates and maintaining the independence of the FRB as long-term goals from a broader perspective. He emphasized the importance of data-driven decisions amidst uncertainties like tariffs and inflation, acknowledging challenges in accurately interpreting employment data due to recent labor strikes and natural disasters.

The US economy recorded a GDP growth rate of 2.8% in the third quarter, maintaining a strong consumer and business spending situation. However, Powell highlighted risks to financial stability, particularly mentioning the potential impacts of the Trump administration's trade and tariff policies. The FRB continues to focus on ensuring a stable economic situation despite these uncertainties.

Other US labor market data to be released this week
The JOLTS, announced by the US Department of Labor on the 3rd quarter employment trends survey in October, showed a job opening number of 7.74 million 4000, an increase of 370,000. Market expectations were 7.47 million 5000. The number of layoffs and discharges decreased significantly by 1.63 million 3000, a decrease of 169,000, marking the largest decline in a year and a half. The number of job openings in September was revised downwards from the initially announced 7.44 million 3000 to 7.37 million 2000. The number of job openings per unemployed person in October was 1.11, up from 1.08 the previous month.

According to the ADP Research Institute in the US, the November national employment report released on the 4th stated that the number of private sector employers increased by 140,000. The increase was at a slow pace. Market expectations were an increase of 150,000. October's increase from 230,000 to 180,000 was revised downward. By industry, education and healthcare services increased by 50,000 people. Construction increased by 30,000, trade, transportation, and utilities increased by 28,000. On the other hand, manufacturing decreased by 26,000. Wages for workers who stayed in the same job without changing careers increased by 4.8% compared to the same month last year. Wages for job changers increased by 7.2%.

Will the Federal Reserve Board lower interest rates in December?
Ahead of the year-end FOMC meeting, bond market traders are expecting an interest rate cut. According to CME's FedWatch Tool, there is a 77% probability in the futures market that the central bank will cut interest rates by 0.25 percentage points. On the other hand, the probability of no rate cut is 25%, and very few are predicting a larger cut. The current target range for the federal funds rate is 4.50% to 4.75%.