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 data on consumption, employment, and inflation. Due to the impact of the federal government shutdown (Shutdown·temporary suspension of work), there had been a gap in collecting statistics, making it difficult to gauge the current state of the US economy. As such, these upcoming indicators are expected to partially resolve the uncertainty that has persisted.
According to the US 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 provider Morningstar, nonfarm payrolls in November are expected to increase by 40,000, with the unemployment rate 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 the October employment data was also not released due to the shutdown, it is possible that some month-to-month volatility may be reflected in these figures.
Recently, warning signs have been detected across various employment indicators. According to the October Job Openings and Labor Turnover Survey (JOLTs) released by the US Department of Labor, the number of hires was 5,149,000 (hiring rate 3.2%), down from 5,367,000 (3.4%) in the previous month. In contrast, the number of layoffs increased to 1,854,000 (layoff rate 1.2%) from 1,781,000 (1.1%) the previous month, reaching the highest level since early 2023.
This employment trend is interpreted as a result of companies becoming more cautious about new hiring amid tariff policies and economic uncertainty. It is also cited as one of the reasons why the US Federal Reserve (Fed) has 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, some experts argue that further data is needed before concluding that the labor market is cooling rapidly.
There are also 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 by 3.1% year-on-year. Compared to the 3.0% increase in both indicators in September, the rate of increase appears to have grown slightly this time.
Such inflation trends could spark debate within the Fed over whether to prioritize employment stability or inflation control in policy decisions. Previously, Cleveland Federal Reserve Bank President Beth Hammack warned of inflationary pressures and emphasized the need to maintain a tight monetary policy in her remarks on December 12, leading to a rise in the yield on 30-year US Treasury bonds. While there is a standoff between advocates of further rate cuts and those favoring a hold among Fed officials, making a sudden policy shift unlikely in the short term, some analysts predict that continued hawkish (monetary tightening) comments could add further upward pressure to Treasury yields.
With employment and inflation sending mixed signals, attention is also on whether consumer spending can act as a buffer for the US economy. Retail sales for November, to be released on December 16, are expected to rise by 0.1% from the previous month. The key question is whether consumer spending will continue its moderate growth, as seen with a 0.2% increase in September, or enter a slowdown phase.
In addition, the S&P Global Manufacturing and Services Purchasing Managers' Index (PMI) for December will be released on December 16, weekly initial jobless claims on December 18, and existing home sales data for November on December 19. The series of releases will provide a comprehensive view of the US manufacturing, employment, and housing markets. However, there are limitations to the employment and inflation statistics being released this time, as some data points may be missing due to the shutdown, making them incomplete. Therefore, some experts suggest that it is necessary to focus on trends rather than single data points when interpreting these 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 about the differences within the Fed regarding future economic assessments and the path of monetary policy.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
