"Signs of sluggishness". How will the market react to the long-awaited US labor market data?

The U.S. Bureau of Labor Statistics on Tuesday, December 16, published a report on the labor market, combining data for two months - October and November. According to the new information, the number of jobs outside agriculture in November in the U.S. increased by 64 thousand, while economists surveyed by Reuters expected to see this figure at about 50 thousand. In general, the report shows signs of sluggishness, but not rapid deterioration in the labor market in the U.S., notes Bloomberg.

The information was released with a delay due to disruptions in the collection of statistics caused by the 43-day shutdown of the U.S. government.

The U.S. Bureau of Labor Statistics (BLS; The Bureau of Labor Statistics), following the end of the longest federal government shutdown in the nation's history, released a delayed report on U.S. employment for November on December 16, along with some data for October. According to the report, the economy added 64,000 jobs in November, which was above market expectations, while the unemployment rate rose to 4.6%. In contrast, October saw a decline in employment, with nonfarm payrolls falling by 105k jobs amid a mass exodus of federal employees.

Interest in the report was particularly high because its publication was delayed by the 43-day U.S. government shutdown in October and November. The document combines data that the Bureau of Labor Statistics under normal circumstances should have published in early November and then in early December. At the same time, due to the lack of statistical data, the current report lacks information on the unemployment rate for October and a number of other indicators of household surveys. Their collection was impossible during the shutdown, Investopedia explains.

The Bureau of Labor Statistics plans to release the final revision of the underlying U.S. employment data in February along with the January report, Reuters writes.

At the U.S. stock market at the beginning of the trading session on December 16, there were insignificant changes, indicates Bloomberg. Futures on the Dow Jones rose 0.14%, the S&P 500 index - 0.12%, and futures on the Nasdaq 100 added 0.13%. Trading in Treasuries and the U.S. dollar was also subdued as investors expect a weakening labor market to encourage the Federal Reserve to cut interest rates further in the coming months, Bloomberg notes.

The published data reinforced the US Federal Reserve's concerns that the labor market is slowing markedly and there is a risk of a more significant rise in unemployment, Investopedia notes. These indicators are key to the Fed's interest rate decisions: weakening employment strengthens the case for easing monetary policy even as inflationary pressures persist. The US Congress, Investopedia reminds us, has entrusted the Fed with a "dual mandate": to keep inflation low and employment as high as possible. Over the past three meetings, in an effort to stimulate spending and boost employment, Fed officials have lowered the key interest rate. "We believe it will become increasingly clear: the 'maximum employment' component of the Fed's 'mandate' is at risk," analysts at Wells Fargo Securities wrote before the BLS released its statements.

Before the release of the latest data on the U.S. labor market, employment forecasts for October in the States on Wall Street differed markedly. Among the most optimistic estimates was the forecast of Goldman Sachs, allowing growth by 10 thousand jobs, wrote SNBC. Citigroup expected a reduction of 45 thousand jobs, while Deutsche Bank, Wells Fargo and Bank of America predicted a decline of 60 thousand jobs or more. At the same time, most experts assumed that the U.S. labor market showed a recovery in November. Economists surveyed by Dow Jones predicted employment growth of 50 thousand jobs.

The labor market has already shown contraction twice this year - in June and August, which has not happened since 2020. Job losses in October reflect the departure of more than 150,000 federal employees who agreed to deferred compensation payments as part of U.S. President Donald Trump's initiative to reduce the role of the authorities in the economy and government, Reuters writes. Most of them dropped out of government payrolls in late September, with their salaries paid retroactively after government agencies reopened. "These layoffs are not of significant economic significance as we expect most of the program participants to have either retired or found other employment in the meantime," said Andrew Husby, BNP Paribas senior U.S. economist.

Overall, the report was a mixed signal for workers: on the one hand, it does not indicate a wave of mass layoffs, on the other hand, it confirms that few opportunities for hiring and career growth remain, notes Investopedia.

"The data we have now look fuzzy but are alarming. We know, for example, that job creation slowed sharply this summer," says Michael Linden, a senior fellow at the Washington Center for Equitable Growth. - Obviously, affordability and price levels are at the top of the list for most Americans today, but we don't want to add unemployment and job losses to that list.

This article was AI-translated and verified by a human editor