Here’s what the market will be looking for in Friday’s key jobs report

At
a
time
when
the
economy
is
supposed
to
be
slowing,
Friday’s
jobs
report
is
expected
to
show
that
employers
actually
picked
up
the
hiring
pace
in
November.

Not
that
there’s
anything
wrong
with
that.
A
growing
economy
is
a
good
thing,
and
nothing
underpins
that
better
than
a
solid
labor
market.
Economists
surveyed
by
Dow
Jones
expect
the
Labor
Department
to
report
that
nonfarm
payrolls
expanded
by
190,000
last
month,
up
from
the
150,000
in
October.

But
investors
and
policymakers
have
been
expecting
things
to
slow
down
enough
to
at
least
allow
the
Federal
Reserve
to
call
an
end
to
this

cycle
of
interest
rate
hikes
as
inflation
ebbs
and
the
supply-demand
mismatch
in
employment
evens
out.

A
hot
jobs
report
could
undermine
that
confidence,
and
put
a
damper
on
what
has
been
a
buoyant
mood
on
Wall
Street.

“There’s
some
risk
to
the
upside
because
of
the
returning
auto
workers
who
were
on
strike,”
said
Kathy
Jones,
chief
fixed
income
strategist
at
the
Schwab
Center
for
Financial
Research.
“So
it
looks
like
a
steady
but
slowing
jobs
market.”

Payroll
growth
has
averaged
204,000
over
the
past
three
months,
a
solid
gain
though
well
below
the
342,000
level
for
the
same
period
in
2022.
The
unemployment
rate
over
the
past
12
months,
however,
has
risen
just
0.2
percentage
point
to
3.9%,
elevated
from
where
it
was
earlier
in
the
year
but
still
characteristic
of
a
robust
economy.

However,
there
are
a
number
of
dynamics
at
play
in
the
current
picture
that
make
this
week’s
report,
which
will
be
released
at
8:30
a.m.
ET,
potentially
critical.

Probably
the
most
important
data
point
outside
the
headline
numbers
will
be
wages.

Average
hourly
earnings
are
expected
to
show
acceleration
of
0.3%
from
October
and
4%
over
the
12-month
period,
according
to
Dow
Jones.

The
yearly
average
hourly
earnings
level
is
not
consistent
with

the
Fed’s
2%
inflation
goal,
but
it
is
off
its
March
2022
peak
of
5.9%.
Getting
wage
growth
to
a
sustainable
level
is
vital
to
bringing
inflation
down,
so
anything
more
pronounced
could
generate
a
market
reaction.

“When
you
come
down
to
trying
to
measure
supply
and
demand,
price
is
probably
the
most
accurate
way
to
look
at
it,
and
you
know
that
wage
growth
has
slowed
considerably,”
Jones
said.
“So
it
tells
you
supply
and
demand
are
coming
back
on
track.”

Outside
of
wages,
the
headline
unemployment
rate
could
get
some
extra
scrutiny.

Though
the
jobless
figure
has
risen
just
incrementally
from
a
year
ago,
it’s
up
half
a
percentage
point
from
its
recent
low
of
3.4%
in
April.

The
difference
is
significant
in
that
a
time-tested
indicator
known
as
the

Sahm
Rule
shows
that
when
the
unemployment
rate
rises
half
a
point
from
its
most
recent
low
on
a
three-month
average,
the
economy
is
in
recession.

However,
even
the
rule’s
author,
economist
Claudia
Sahm,
said
there
are
no
guarantees
that
will
be
the
case
this
time
around,
though
warning
signs
are
definitely
in
place.

“There
is
a
logic
to
it
that
…
once
the
unemployment
rate
starts
rising,
it
often
keeps
going,
and
it
picks
up
steam
and
it’s
a
feedback
loop,”
Sahm
said
recently
on
CNBC.
“That’s
why
a
small
increase
in
the
unemployment
rate
can
be
really
bad
news,
because
it
keeps
going.”

Other
data
this
week
showed
some
wobbles
in
the
labor
market.

Job
openings
hit
their
lowest
level
in
2
1/2
years,
and
ADP
reported
that

private
payrolls
grew
just
incrementally.
Though
continuing
jobless
claims
edged
lower,
they
are
running
high.

However,
workers
returning
from
strikes
in
the
auto
industry
and
Hollywood
could
bolster
the
November
total
by
as
much
as
38,000,
according
to
Goldman
Sachs.
The
firm’s
economists,
in
fact,
expect
that
the
report
will
be
considerably
above
the
Wall
Street
estimate
–
for
a
total
of
238,000
that
could
jangle
some
nerves
for
its
potential
to
harden
the
Fed’s
position.

Neil
Costa,
founder
and
CEO
of
recruitment
marketing
firm
HireClix,
said
he’s
witnessed
a
slowdown
in
job
ads.

“We’ve
definitely
seen
a
cooldown
happening
this
year,”
he
said.
“It
started
in
the
early
part
of
the
year,
and
we’ve
seen
people
pull
back
on
their
recruitment
advertising
dollars,
without
a
doubt.”

However,
he
said
pockets
of
the
jobs
market
remain
strong,
citing
health
care
specifically,
while
he
has
seen
a
slowing
in
transportation,
logistics
and
manufacturing.
Costa
is
looking
for
continued
slowing
in
2024,
though
nothing
consistent
with
a
deep
recession.

“People
are
just
being
extremely
cautious
at
this
particular
point,”
he
said.