Nonfarm Payrolls Preview: November Rebound Likely, December Fed Rate Cut Uncertain

Non-Farm Employment Data Expected to Rebound Significantly

According to economists' forecasts, the November non-farm employment data is expected to show strong growth, with approximately 215,000 new jobs added, significantly higher than the mere 12,000 seen in October. The U.S. Bureau of Labor Statistics pointed out that October's tepid employment numbers were largely impacted by Hurricanes Helen and Milton, as well as strikes in the manufacturing sector. With these short-term factors expected to improve in November, the economy is anticipated to show notable signs of recovery.

Among the factors, about 40,000 workers have returned to their jobs after the end of strikes, contributing significantly to job growth. David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, noted, "Part of this employment data rebound is a correction of the October figures." He anticipates that new job creation in November will slightly exceed 200,000.

Distinct Industry Disparities: Hurricane Recovery and Seasonal Effects

UBS economists forecast that the recovery in regions affected by the storms will add about 60,000 new jobs to the employment market in November. Meanwhile, recruitment enthusiasm in non-cyclical industries such as government, education, and health services has increased, and manufacturing hiring is expected to show improvement.

However, Goldman Sachs economists caution that a later-than-usual Thanksgiving and Black Friday may reduce retail hiring by approximately 15,000. Additionally, although the transportation and warehousing sector might see unexpectedly high growth due to holiday logistics demand, total new jobs might hold around 235,000.

Unemployment Rate and Wage Growth Still Crucial

Despite robust job growth, the unemployment rate is expected to remain stable at 4.1%, and wage growth data still needs close monitoring. Should the November Consumer Price Index (CPI) report indicate persistent inflation, it could impact the Federal Reserve's decision to cut interest rates in December.

Kelly stated, "The Federal Reserve may adopt a more cautious approach to rate cuts. If the wage growth data exceeds expectations or the inflation report is unfavorable, the likelihood of a December rate cut will diminish." Nonetheless, most economists still anticipate the Fed will announce a rate cut after their December 18 meeting to further support economic growth.

The Fed's Dilemma: Economic Momentum or Inflation Pressure?

As the year's final Federal Reserve meeting approaches, bond market investors are eagerly expecting a rate cut. However, analysts warn that the Fed might lean more towards deciding based on inflation data.

Overall, the release of November non-farm employment data will be a critical indicator measuring the U.S. labor market and economic recovery, also influencing the Federal Reserve's upcoming monetary policy direction to some extent.

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