Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The US economy added 227,000 jobs in November, a sharp rebound after the previous month’s total was dragged down by hurricanes and the Boeing strike.
Friday’s number, published by the Bureau of Labor Statistics, beat a consensus forecast of 200,000 by economists surveyed by Reuters.
It marked a jump from the downwardly distorted figure of 12,000 new positions initially recorded for October. That figure was revised higher to 36,000 in Friday’s data release.
The unemployment rate rose incrementally to 4.2 per cent.
Market participants expected the November figure to outperform underlying trends because of the previous month’s poor performance.
Treasury yields fell as investors bet that a Federal Reserve rate cut this month is now slightly more likely. Interest rate futures implied an 85 per cent likelihood of a cut, up from a 70 per cent chance immediately before the data release.
The two-year yield, which reflects interest rate expectations, declined 0.06 percentage points, to 4.11 per cent.
US stocks were poised to open slightly higher, with S&P 500 futures up 0.1 per cent.
The jobs report is one of the final big data releases the Fed will consider before deciding at its December 17-18 meeting whether to proceed with a third consecutive interest rate cut.
Chair Jay Powell said this week that the Fed could “afford to be a little more cautious” on reducing rates because the US economy was in “remarkably good shape” and inflation had come in a little higher than earlier anticipated.
His fellow governor Christopher Waller warned that progress on getting inflation down “may be stalling”, although he added he supported a December cut.
A quarter-point reduction this month would lower the target range of the federal funds rate to 4.25 to 4.5 per cent.
Friday’s jobs figures contrast with October’s total, which was by far the worst such report of the Biden administration, as two deadly hurricanes in the south-east and the Boeing strike took their toll on survey responses and the real economy.
This is a developing story
Source link
