Employment Slows in November, Inflation Pressures Expected to Rise
Partial Resolution of Uncertainty in US Economic Trends
Clues for the Future Path of Monetary Policy Likely to Emerge
This week, Wall Street's attention is focused on a series of macroeconomic indicators to be released, including those on consumption, employment, and inflation. Due to the impact of the federal government shutdown (Shutdown·temporary suspension of operations), there had been a gap in collecting statistics, making it difficult to gauge the current state of the U.S. economy. As a result, these upcoming indicators are expected to partially resolve the uncertainty that has persisted.
According to the U.S. Bureau of Labor Statistics (BLS) on December 14 (local time), the November employment report will be released on December 16.
According to market forecasts compiled by financial information company Morningstar, nonfarm payrolls for November are expected to increase by 40,000, and the unemployment rate is projected to be around 4.4%. This represents a significant slowdown compared to the increase of 119,000 in nonfarm payrolls in September. However, since employment data for October was also not released due to the shutdown, there is a possibility that some monthly volatility may be reflected in these figures.
Recently, there have been signs of instability across employment indicators. According to the October Job Openings and Labor Turnover Survey (JOLTs) released by the U.S. Department of Labor, the number of hires was 5,149,000 (hiring rate of 3.2%), down from the previous month's 5,367,000 (3.4%). In contrast, the number of layoffs increased to 1,854,000 (layoff rate of 1.2%) from 1,781,000 (1.1%) in the previous month, marking the highest level since early 2023.
This employment trend is interpreted as the result of companies becoming more cautious about new hiring amid tariff policies and economic uncertainty. It is also seen as one of the reasons why the Federal Reserve (Fed) cut its benchmark interest rate by 0.25 percentage points for three consecutive times in September, October, and this month. However, since the unemployment rate remains at a low level, there is a cautious view that additional indicators are needed before concluding that the labor market is cooling rapidly.
There are concerns that inflation indicators may show renewed upward pressure. According to Morningstar, both the Consumer Price Index (CPI) and core CPI for November, to be released on December 18, are expected to rise 3.1% year-on-year. Compared to the 3.0% increase in both indicators in September, the rate of increase appears to have edged up slightly this time.
Such inflation trends could trigger debate within the Fed over policy priorities between employment stability and inflation control. Previously, Cleveland Fed President Beth Hammack warned of inflationary pressures and emphasized the need to maintain a tight interest rate stance on December 12, leading to a rise in the yield on 30-year U.S. Treasury bonds. With Fed officials divided between calls for further rate cuts and holding rates steady, a sharp shift in policy direction in the short term appears unlikely. However, if hawkish (favoring monetary tightening) statements continue, there are expectations that additional upward pressure could be placed on Treasury yields.
As employment and inflation send mixed signals, attention is also focused on whether consumer trends can provide a buffer for the U.S. economy. Retail sales for October, to be released on December 16, are expected to increase by 0.1% from the previous month. The key question is whether consumption will continue its modest growth following the 0.2% increase in September, or whether it will enter a slowdown phase.
In addition, December's S&P Global Manufacturing and Services Purchasing Managers' Index (PMI) will be released on December 16, weekly initial jobless claims on December 18, and existing home sales data for November on December 19. The successive release of these indicators will provide a comprehensive picture of the U.S. manufacturing, employment, and housing markets. However, it is pointed out that the employment and inflation statistics being released this time are incomplete, with some data missing due to the shutdown, so it is necessary to interpret the data based on trends rather than relying on single indicators.
Additionally, public remarks are scheduled from New York Fed President John Williams, Atlanta Fed President Raphael Bostic, Fed Governor Stephen Miran, and Fed Governor Christopher Waller, which are expected to provide further clues regarding differences within the Fed on economic outlook and the path of monetary policy going forward.
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