The November employment report surpised to the upside with the economy adding 266K jobs. According to analysts at Wells Fargo, the trend in hiring has turned decidedly higher since the summer, but they do not expect the recent pace to last.
Key Quotes:
“The trend in hiring has rebounded significantly since the middle of the year.”
“Part of the impressive headline gain came from the end of the GM strike.”
“The service sector continues to show few signs of spillovers from weakness in the goods sector.”
“The labor market remains tight. The unemployment rate ticked back down to match its 50-year low of 3.5% despite a slowing in the household survey measure of employment. Average hourly earnings came in 0.1 percentage point weaker than expected, but October’s increase was revised higher. Average hourly earnings are now up 3.1% year-over-year, and along with the renewed strength in hiring, suggests income growth from wages & salaries should remain close to 5%.”
“The 200K pace of private payroll growth the past three months is unlikely to be maintained, especially as companies continue to cite a high degree of difficulty finding workers. The Fed has signaled it will be on hold for at least its upcoming meeting after its 75 bps of insurance cuts since this summer. With the labor market more than holding up, we see no reason for that to change now.”
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