US job numbers are expected to bounce back strongly after the weather and strike-impacted numbers from October. The headline figure printed at just 12,000 jobs, considerably lower than expected and mainly due to big ‘temporary disruptions.’ Economists reckon Hurricanes Milton and Helene are predicted to have depressed payrolls by roughly 60k, with the former having by far the biggest impact. Strike activity by Boeing took off around 44k jobs so these two figures are the base for a bounce back in the headline print.

Data expectations

The latest Reuters poll of economists sees around 210k of jobs added in November. That would mean “true” payrolls growth of just 106k. (210k – 60k -44k) The unemployment rate is expected to stick at 4.1%. That is some way below the September Fed median projection of 4.4% by year end, with just one more report to come. Wage growth should also be more muted after the surprise jump to 0.4% in October and is seen slowing to a relatively benign 0.3% m/m. As we always say, watch out for revisions to the headline print, which can spark volatility to price action. That is especially true after the previous 112k downward adjustment to the prior two months in the previous report. We note there are often upward revisions after hurricanes which portray a healthier labour market. This may not happen all in one month but over a couple.

Initial jobless claims for the week that coincides with the BLS survey window fell to 215k heading into the November data (vs 242k for the comparable period in October), while continuing claims picked up from 1.888mn to 1.907mn. The pick-up in the former broadly supports the idea that the flow of initial claims is still high enough for unemployment to continue to rise. Consumer confidence figures showed that consumers’ perception of how plentiful jobs are slipped a bit in November. 

Additional labour market readings to be released before payrolls may inform the estimate. They will include Tuesday’s JOLTS job vacancies for October which came out on the strong though with negative revisions, Wednesday’s employment subindex to the ISM-services gauge and ADP private payrolls for November, and Challenger job losses for November on Thursday.

Market reaction

Money markets currently price in roughly a 74% chance of a 25bps rate cut at the FOMC December meeting. A headline figure of around 150k with an unchanged jobless rate of 4.1% is likely to be the sweet spot for stock markets and a continued rally into the new year. That type of report keeps a December Fed rate cut in play but is also a healthy level of job creation.

An NFP print above 240k, with the unemployment rate unchanged at 4.1%, will see the odds of a December rate reduction reined in with markets questioning if the Fed should simply sit on their hands. It would take a very weak NFP, say sub-100k with a higher jobless rate to reverse the US equity bull move as investors question the underlying health of the US economy.