In a report disclosed on Wednesday, it was disclosed that US private payrolls growth fell below expectations in November, indicating a gradual cooling of the labor market. As per the ADP National Employment Report, the expansion in private payrolls amounted to 103,000 jobs last month, lagging behind the 130,000 jobs anticipated by economists in a Reuters poll. Furthermore, October’s data was revised downward, revealing the addition of 106,000 jobs instead of the initially reported 113,000, emphasizing the tempered trajectory of US private payrolls growth.
Despite being published in advance of the Labor Department’s more comprehensive employment report due on Friday, the ADP report has historically proven to be an unreliable predictor of the private payrolls count in the official employment report.
The labor market’s deceleration is attributed to the cumulative impact of the Federal Reserve’s aggressive interest rate hikes, totaling 525 basis points since March 2022. On Tuesday, the government reported that job openings plunged to a 2-1/2-year low of 8.733 million in October. Furthermore, the ratio of job vacancies to unemployed individuals hit its lowest point since August 2021, with 1.34 vacancies for every jobless person.
In light of a Reuters survey of economists, the Labor Department’s Bureau of Labor Statistics is expected to announce an increase of 153,000 private payrolls in November. This projection accounts for approximately 33,000 United Auto Workers union members returning to work after a strike. In October, private payrolls had risen by 99,000.
The broader employment landscape is forecasted to show an overall gain of 180,000 total nonfarm payrolls in November, following a rise of 150,000 in the previous month.
The prevailing conditions of a moderating labor market, coupled with receding inflation, have led financial markets to speculate that the Federal Reserve’s tightening monetary policy phase may be drawing to a close. There is a growing belief that the US central bank could consider rate cuts as early as March next year. However, analysts anticipate the Fed to maintain its current rates when it convenes next Wednesday.
In conclusion, the subdued US private payrolls growth reported in November highlights the persistent challenges in the labor market, suggesting a measured pace amid economic uncertainties and underscoring the need for ongoing scrutiny of key indicators in the coming months.
Source: Reuters
