November Jobs Report Outruns Expectations, Unemployment Drops, Jeopardizing Rate Cut Bets

The pace of employment growth beat economist expectations to the upside in November, indicating a more pronounced strength in the U.S. labor market than initially projected.

Non-farm payrolls (NFPs) grew by 199,000 in November, an increase from the 150,000 reported in October and above the expected 180,000, according to Friday’s Bureau of Labor Statistics report.

This latest jobs report could potentially jeopardize aggressive market bets on a wave of Federal Reserve interest rate cuts in 2024 that are driven by concerns about an economic slowdown.

November Jobs Report: Key Highlights

• In addition to the NFP data, the jobs report also noted a sharper-than-expected decline in the unemployment rate, from 3.9% to 3.7%.
• Annual wage growth remained steady, with average hourly earnings flat at 4% compared to November 2022, aligning with expectations.
• On a monthly basis, average hourly earnings increased by 0.4%, accelerating compared to October’s 0.2% and beating the expected 0.3%.

Market Reactions

Moments after the release of the November jobs report, the U.S. dollar, as tracked by the Invesco DB USD Index Bullish Fund ETF UUP, rallied, reflecting a growing market fears that a robust jobs report could call into question the Fed’s ability to deliver a wave of rate cuts in the coming year.

Equity futures were on the decline one hour before the opening of the Wall Street trading session, with the Nasdaq 100 down 0.7%.

Technology stocks, as tracked by the Invesco QQQ Trust QQQ, closed 1.4% higher on Thursday, driven by a widespread rally in AI-related stocks. A positive close on Friday would mark the sixth consecutive positive week, marking the longest streak since June.

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