NFP Readings Remain Terrible In November! Will This Affect The Fed's Actions?


 Job growth was much better than expected in November despite the Federal Reserve's aggressive efforts to slow the labor market and tackle inflation.

The NFP reading rose 263,000 for the month while the unemployment rate was 3.7%, the Labor Department reported on Friday. Economists polled by Dow Jones had been looking for an increase of 200,000 on the payroll and 3.7% for the unemployment rate.

The monthly increase was only slightly down from the upwardly revised 284,000 in October. A broader measure of unemployment including discouraged workers and those holding part-time jobs due to the economy shrank lower to 6.7%.

The numbers may not do much to slow the Fed, which has raised interest rates steadily this year to bring down inflation, which is still near its highest level in more than 40 years. The rate hike has brought the Fed's benchmark overnight lending rate to a target range of 3.75%-4%.

In another blow to the Fed's anti-inflation efforts, average hourly earnings jumped 0.6% for the month, double the Dow Jones estimate. Wages rose 5.1% on a year-over-year basis, also well above expectations of 4.6%.

Futures markets tied to the Dow Jones Industrial Average plunged following the report, falling more than 400 points as warm jobs data could make the Fed more hawkish.

Other sector increases included health care (45,000), government (42,000) and other services, a category that includes personal services and laundry and showed a total increase of 24,000. Social assistance saw an increase of 23,000, which according to the Department of Labor has brought the sector back to what it was in February 2020 before the spread of the Covid epidemic.

The construction sector added 20,000 jobs, while the information sector increased by 19,000 and manufacturing saw a gain of 14,000.

Fed Chairman Jerome Powell earlier this week said job gains were "far in excess of the rate needed to accommodate population growth over time" and said wage pressures were contributing to inflation.

Markets expect the Fed to raise its benchmark interest rate by 0.5 percentage points when it meets later this month.