The U.S. economy added 155,000 jobs in November as the unemployment rate held at 3.7%, the Labor Department reported on Friday. Wage growth, the key number for investors worried about Fed rate hikes, was 3.1%, still the fastest since early 2009. Odds favor a Fed rate hike when the central bank meets in two weeks, despite a rough spell for the Dow Jones and tame inflation.
Wall Street economists expected 190,000 jobs, 3.7% unemployment and 3.2% average hourly wage growth.
After the November jobs report, Dow Jones futures slashed its modest losses to just below break-even. The Dow Jones rose 0.4% in morning trade, with the S&P 500 index up 0.3% and the Nasdaq composite up 0.1%. Rebounding oil prices also lifted the S&P 500 and Dow Jones as Russia offered more help with an OPEC crude oil production cut.
The 10-year Treasury yield was at 2.9%, after sliding from above 3% this week. The 2-year Treasury yield is 2.76%.
Coming in slightly on the weak side, the jobs report gives the Fed just a little more flexibility to delay a rate hike amid financial market fallout.
The economy added 27,000 factory jobs last month, the Labor Department said.
Some economists had expected a softening in job growth, particularly manufacturing jobs, as companies wrestled with President Trump’s tariffs on China and braced for the possibility of an escalation. The 10% tariffs that took effect were set to jump to 25% on Jan. 1. Now that won’t happen for at least 90 more days, as Trump and Chinese President Xi Jinping try to strike a trade deal.
Amazon Wage Hike Boost
Wage growth got a lift from Amazon (AMZN), whose $15 minimum wage took effect Nov. 1. Amazon initially said that 250,000 company employees and 100,000 seasonal hires were due to benefit from the wage hike. But the Amazon wage hike became broader still after the company agreed to include workers making close to $15.
The Amazon wage hike could have a spillover effect as other employers raise wages to attract and retain workers.
Fed Rate Hike Impact
A Fed rate hike is still expected in two weeks, although odds have slipped to about 70% as the stock market has hit more turbulence. Markets are only pricing in one Fed rate hike in 2019.
Fed Chairman Jerome Powell took a more-dovish turn last week, saying that interest rates are “just below” neutral. Policymakers are mulling using the December meeting to adopt a wait-and-use approach vs. the current gradual rate hike path, according to a Wall Street Journal report. That report helped the major stock market averages cut losses into Thursday’s close, with the Nasdaq composite moving modestly higher.
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