Instant View: U.S. November payrolls lower than expected


(Reuters) – U.S. job growth slowed in November and monthly wages increased less than expected, suggesting some moderation in economic activity that could support expectations of fewer interest rate increases from the Federal Reserve in 2019.


– Total payrolls rose 155,000 vs 200,000 estimate and downwardly revised 237,000 prior (original 250,000) – Private payrolls rose 161,000 vs 200,000 estimate and upwardly revised 251,000 prior (original 246,000)

– Unemployment rate unchanged at 3.7 pct vs 3.7 pct estimate

– Average hourly earnings rose 0.2 pct month-to-month vs 0.3 pct estimate and downwardly revised 0.1 pct prior (original 0.2 pct)

– Average hourly earnings rise 3.1 pct year-over-year vs 3.1 pct estimate and unrevized 3.1 pct prior

– U-6 rate rises to 7.6 pct vs 7.4 pct prior – Labor force participation unchanged at 62.9 pct

– Household survey: Workforce grew by 133,000; employed rose by 233,000; unemployed fell by 100,000


STOCKS: S&P e-mini futures ESv1 pare losses to turn modestly positive, point to little change at the opening bell

BONDS: 2- US2YT=RR and 10-year US10YT=RR Treasury yields rise slightly from prior levels; 10-year yield around 2.9 pct; 2s at 2.77 pct; 2-10 spread just above 13 basis points

FOREX: The dollar index .DXY weakens modestly

RATE FUTURES: Fed funds contract for January 2020 FFF0 unchanged in price; implied fed funds effective rate at expiry 2.63 pct vs current effective rate of 2.20 pct



“In terms of a snapshot for the economy, and while somewhat softer than consensus expectations, this is a solid November jobs report that goes counter to talk of recession.

“Encouragingly, wage growth continues just above 3 percent and job creation is averaging 170,000 over the last three months. As regards to longer-term issues, the rather sluggish labor participation rate remains a concern suggesting skill mismatches is an issue.

“The report is not soft enough to deter a December rate hike but it will contribute to a downward revision in central bankers’ policy guidance for rate hikes in 2019.”


“This is kind of what I was expecting in the sense that there was some asymmetry in market reaction, ie if there was a strong number the market would discount it, but a weak number, or even a slight miss in the headline, is going to be perceived as a weakness and a rally in bonds, so that’s kind of the market reaction we’re seeing post payrolls.

“The number itself is pretty much in line with past prints, 155,000 I don’t see as a huge miss, it’s below consensus. It’s still overall a very good number and it reaffirms the trajectory we’ve experienced in 2018, so it shouldn’t really have an outsized impact either on broader markets or even the cash markets. I think this is probably just a knee-jerk reaction after the headline print.”

“To me this is a status quo number, I wouldn’t read this as the Fed should be slowing down next year. There might be a lot of other reasons why we might consider a pause in 2019, but I just don’t see today’s data as being a catalyst for that.”

Americas Economics and Markets Desk; +1-646 223-6300


By Kenyan Digest

The Kenyan Digest Team