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Market Disappointed: November Jobs Fall Short at 103,000 (ADP)
Labor Market Cools: Signs of Normalcy Emerge in November Jobs Report
Slow and Steady Wins the Race: Private employers added 103,000 jobs in November, marking another step towards a normalized labor market, payroll firm ADP reported Wednesday. While lower than expected (130,000), the figure signifies a gradual slowdown in hiring amidst ongoing inflation concerns.
Shifting Sands:
- Services Sector Leads: The bulk of job gains (117,000) came from the services sector, particularly trade, transportation, and utilities.
- Leisure & Hospitality Pauses: After driving growth for much of the year, leisure and hospitality took a breather, shedding 7,000 jobs.
- Mid-Sized Companies Drive Hiring: Businesses with 50-249 employees were responsible for 71,000 new jobs.
Wage Growth Moderates: Average wages rose at an annual rate of 5.6%, the lowest since September 2021, albeit above current inflation levels. Nela Richardson, ADP’s chief economist, sees this as a signal of ”more moderate hiring and wage growth in 2024“.
Looking Ahead:
- Job Openings Decline: Tuesday’s job openings data further hinted at a cooling market, showing a dip from 9.35 million in September to 8.7 million in October.
- Labor Market Balance: Experts see this as a move towards a balanced labor market, with Haley Damm from Adecco noting “the lowest job openings in some time, but still more jobs than job seekers.”
- Fed’s Next Move: This balance is crucial for the Federal Reserve’s inflation fight. While most analysts predict unchanged interest rates next week, Julia Pollak of ZipRecruiter expects potential cuts as early as March.
Recession Looms?
Despite these positive signs, the specter of recession continues to linger. Sevin Yeltekin, dean of the Simon Business School, highlights the mixed economic data, with strength in some sectors and weakness in others. He remains cautiously optimistic, stating, “I am maybe a little bit optimistic.”
Positive Indicators:
- Energy Costs Drop: Falling fuel prices, with gasoline down 11 straight weeks, offer relief on the inflation front.
- Bond Yields Slide: The 10-year Treasury yield falling from 5% to 4.2% reflects investor confidence in economic stability.
Conclusion:
November’s jobs report paints a picture of a** gradually cooling labor market** and growing wage moderation. While the Fed likely remains cautious, the overall trend bodes well for a balanced economy and potentially lower interest rates in the near future. The path towards a recession, however, remains unclear, demanding continued monitoring of economic data and nuanced analysis.