US: Labour market could deteriorate in the next months – UOB

Alvin Liew at UOB Group’s Global Economics & Markets Research assessed the latest Nonfarm Payrolls figures (Friday).

Key Quotes

“The US nonfarm payrolls (NFP) increased for the 7 th month in a row but the pace of adding jobs has been slowing quite markedly in November.”

“US November job gains clocked in at 245,000 (nonfarm payrolls) from a downwardly revised 610,000 in October and well below the Bloomberg median estimate for 460,000.”

“While the unemployment rate continued to fall to 6.7% (from 6.9% in Oct), but long-term unemployment worsened as those who were out of work for 27 weeks or more, increased by 385,000 to 3.9 million in November, the most since 2013. The long-term unemployed now makes up nearly 37% of the total unemployed in November. Labor force participation rate edged down to 61.5 percent in November (from 61.7% in Oct) and is 1.9ppts lower than in February.”

“With the job recovery showing a clear deceleration trend and a potentially further significant reduction in government jobs in coming months, we still think the unemployment rate could inch back above 7% and the number of new jobs could drop well below 250,000 in December.”

“Perhaps, the only silver lining to the disappointing November jobs report is that it will add as a pressure point to push US lawmakers to move forward with the fiscal stimulus package. That said, the timeline is very tight as the stimulus negotiation is tied with the talks on the US government funding which is set to expire this Friday (11 Dec).”