Solid Non-Farm Payrolls at 228k, above expectations

November Non-Farm Payrolls rose 228,000 solidly above expectations

Month-on-month Average Hourly Earnings rose just 0.2%

This was against the consensus expectation of an increase of 198,000 and Average Hourly Earnings (month-on-month) of +0.3%

Meanwhile the Unemployment Rate held steady at 4.1% - continuing at its lowest level since December 2001.

Now all the speculation centres on how this data may influence the Federal Reserve’s FOMC at next week’s meeting. It’s pretty much an odds-on certainty that the Fed will proceed with a 25 basis point rate hike on Wednesday.

But much of the focus will be on the FOMC’s “dot plot” which illustrates committee members’ thinking of the path and pace of future rate hikes. Back in September the dot plot indicated that the Fed would raise rates by an additional 75 basis points in 2018. However, some analysts believe that with growth picking up and inflation likely to follow the central bank may favour tightening monetary policy by an additional 25 basis points next year – a potential increase of 100 basis points. If that’s the case then it may add to speculation that the yield curve could turn negative – an event which has previously preceded a recession in the US.