Payrolls projected to fall to 200,000


The U.S. labor market is projected to have cooled last month alongside rising interest rates.

The Labor Department is set to release its November monthly jobs report at 8:30 a.m. ET on Friday. Here are Wall Street’s expectations for the report, according to Bloomberg data:

  • Non-farm payrolls: +200,000 expected vs. +261,000 in October

  • Unemployment rate: 3.7% expected vs. 3.7% in October

  • Average hourly earnings, month-over-month: +0.3% expected vs. +0.3% in October

  • Average hourly earnings, year-over-year: +4.6% expected vs. +4.7% in October

If figures come in on par with forecasts, the estimated print will mark the lowest monthly reading in non-farm payrolls since April 2021. Still, with pre-pandemic levels averaging 150-200,000 jobs added or created per month, the figure would reflect a healthy snapshot of labor conditions based on historical trends.

A cool-off in November employment data would be a welcome sign for Federal Reserve officials who have vigorously tried to tamp down an extraordinarily tight labor market that has placed upward pressure on wages and contributed to soaring prices.

But Friday’s figure won’t be enough to deter policymakers from proceeding with further rate hikes to quell inflation, even as Federal Reserve Chair Jerome Powell on Wednesday hinted at slowing the pace and magnitude of increases as soon as later this month.

“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” Powell said, speaking at the Brookings Institution in Washington D.C. earlier this week. “In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.”

Signs of a drop off in jobs have emerged in recent data — particularly in the ADP’s private payrolls report published Wednesday. The release, which serves as an imperfect precursor to the government’s official numbers, showed private companies added 127,000 jobs in November, nearly half of the prior month’s number and below an estimate of 190,000.

Pantheon Macroeconomics Chief Economist Ian Shepherdson has questioned the reliability of ADP’s data, particularly after the company revised its methodology on gathering figures. Shepherdson argues Friday’s payroll figure is likely to come in around 250,000.

“We are profoundly skeptical of the ADP employment report, which does a great job in generating uncritical media coverage for ADP but probably is not a reliable advance indicator of the official payroll numbers,” he warned in a recent note. He points out also that its measure undershot August’s estimate by 123,000, September’s by 80,000 and October’s by 6,000, at an average three-month error of -66,000.

Jobs data will be released Friday amid Powell’s Federal Reserve attempting to tamp down a tight labor market. (Photo by Drew Angerer/Getty Images)

Corporate America has also seen companies announce layoffs in droves, particularly in the technology sector, which has been grappling with robust overspending during the post-pandemic boom.

“Layoffs in the tech sector have garnered a lot of headlines in the last few months but this has not yet translated into a demonstrably weaker labor picture,” Insight Investment Head of Global Fixed Income, North America Brendan Murphy.

Treasury Secretary Janet Yellen, speaking at the Dealbook Summit in New York City on Wednesday, called the Labor Department’s monthly employment report the most important data point officials monitor, along with inflation numbers.

“We don’t want to overshoot full employment, and we do have an inflation problem,” Yellen said. “So you can expect growth to slow, and it has slowed — we continue to grow and have positive growth, but it slowed substantially.”

Yellen argued also that layoff announcements across tech have been an exception, citing “special factors” facing the sector, including a slowing economy, and declining ad revenue.

“What you’re seeing is some writing down of future growth that is inducing firms to rethink people they really need to hire, so we’ve seen the beginnings of job openings fall off a little bit,” Yellen said, emphasizing that as the Fed attempts to reduce the number of job openings, she didn’t believe substantial layoffs were necessary to do so.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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