U.S Non-Farm Payroll Job Rise In November

U.S. employers hired at a steady clip in November while the unemployment rate fell to the lowest level in nine years, signs of enduring labor market growth that will likely leave Federal Reserve officials on track to raise interest rates later this month.

The latest US employment report recorded an increase in in non-farm payrolls of 178,000 for November, which was very close to market expectations of a 175,000 gain. There was a downward revision to the October figure to 142,000, which was originally reported as 161,000 and the three-month moving average was little changed at 176,000 from 175,000 previously.

Unemployment dropped to 4.6 per cent, the unemployment rate was sharply lower than expected with a decline to 4.6% for the month from 4.9% previously with markets expecting an unchanged figure of 4.9%. and wages put a damper on the gains, with the annualized pace of average hourly earnings increases slumping to 2.5 percent.

This also will be the last major employment indicator before the Federal Open Market Committee meets Dec. 13-14 to decide whether the economy has improved enough to resume a rate normalization cycle that started a year ago.

There is no doubt that the Federal Reserve is planning to increase the Fed Funds rate at this month’s meeting unless there is a seismic shift in markets or the economy ahead of the meeting. This data will not disrupt these expectations and as things stand, there is still a 100% chance that rates will be increased this month.

Inarguably, declining participation in the labor force is one of the nation’s more worrisome economic trends, highlighting crosscurrents that have lifted the prospects of many Americans while creating new challenges for others.

"This positive jobs report is another indication that the U.S. economy continues to pick up steam," said Tony Bedikian, managing director and head of global markets at Citizens Bank. "We've seen a rally in equity markets, a stronger dollar and upward revisions to GDP as of late. The markets have priced in a Fed tightening later this month and I think today's report supports that view."

As far as longer-term expectations are concerned, the weaker than expected earnings data will cause some concerns, although the impact will be offset by a slide in unemployment. The net effect is likely to be a slight dampening of 2017 tightening expectations, which will curb dollar support and help ease immediate selling on Treasuries.