Bankinter | Non-farm payrolls (November) came in higher than expected at 65k versus 50k expected. Private payrolls surprised on the upside, reaching 64k versus 50k. However, October figures reflected notable weakness in the labour market, with non-farm payrolls down by 105k. The unemployment rate rose unexpectedly by two tenths of a percentage point to 4.6% (versus 4.5% expected and 4.4% previously), as a result of a proportionally higher increase in the number of unemployed (up 3% versus September) than in the labour force (0.2%). Average hourly wages slowed to 3.5% year-on-year against 3.6% expected and 3.7% previously.
Bankinter analysis team’s view: non-farm payrolls data exceeded forecasts, although the October revision confirmed a clearly weaker employment dynamic. Likewise, the unemployment rate stood at its highest level in four years. The moderation in wage growth seems consistent with this weakness, as companies tend to raise wages when hiring new employees becomes more difficult. In conclusion, rather weak employment figures and slowing wages give the Fed more arguments to continue its process of lowering interest rates.
