Economists React To The November Jobs Report

The S&P 500 rebounded Friday morning after the latest U.S. jobs report was slightly weaker than expected. Slowing but strong jobs growth could prompt the Federal Reserve to slow or pause its interest rate hikes, but one economist says it also serves as an indicator a U.S. recession is not imminent.

The Numbers

The Labor Department reported U.S. non-farm payrolls were up 155,000 in November, short of the 200,000 economists were expecting. Private payrolls were up 161,000 compared to economist expectations of 200,000. The unemployment rate stayed at 3.7 percent on the month, in-line with expectations.

Wage growth of 0.2 percent was also short of expectations of 0.3 percent growth. The Labor Department also lowered its October jobs growth estimate from 250,000 to 237,000.

The services industry led the nation’s job growth in November, adding 132,000 jobs, Government jobs were down 6,000 in the month, while the retail sector added 18,000 jobs ahead of the holiday shopping season.

Experts React

Joseph Brusuelas, Chief Economist at RSM US LLP, said a minor jobs growth miss won't be enough to deter the Fed from sticking to its plan.

“The 155,000 increase in total employment should allay that the Fed will push rates well above neutral in coming months putting at risk the nine-year-old economic expansion,” Brusuelas said. “While, the topline increase is below expectations, it is nearly double the monthly gain necessary to keep the unemployment rate steady, thus the economy continues to churn out new jobs and reflects the strong underlying business conditions that point to steady, albeit slower job growth and economic activity in 2019.”

Bankrate Senior Economic Analyst Mark Hamrick said the report is slightly disappointing, but no reason for investors not to have a happy holiday season heading into 2019.

“The outlook for next year is for slower hiring, but not a halt in job creation,” Hamrick said. “Between tightness in the job market, with some employers struggling to find qualified workers, we shouldn’t expect hiring to be blazing at this point.”

Price Action

Investors gave the report a lukewarm reaction on Friday morning. The SPDR S&P 500 ETF Trust SPY and the SPDR Dow Jones Industrial Average ETF DIA were both down 0.1 percent in early trading.

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