Anticipated recovery in November's employment figures: Significant rebound from October's disappointing tally
Anticipated recovery in November's employment figures: Significant rebound from October's disappointing tally
Economists are projecting a significant boost for November, approximately 17 times the original total.
The Bureau of Labor Statistics is set to release the November employment report at 8:30 am ET on Friday. Experts anticipate a substantial rebound, a sort of reset, from the previous report that was riddled with issues caused by consecutive hurricanes and a major labor strike.
Based on common estimations, the new report is expected to reveal a net addition of around 207,500 jobs in November. The jobless rate, which has served as a guiding point amid the various distortions, is projected to stay at 4.1%, consistent with its level since September.
Dan North, Allianz Trade's senior economist for North America, commented to CNN, "The report last month was one that I told my readers to throw away. The Bureau of Labor Statistics basically said, 'We really can't tell you anything about the hurricanes' impact.' So, what will happen this coming month? Will there be a substantial increase? Well, that seems plausible."
Gus Faucher, senior vice president and chief economist at PNC Financial Services Group, is looking forward to a growth of 250,000 positions in November. Such a strong increase would suggest an underlying payroll growth of about 150,000 jobs per month, according to Faucher.
He expressed his optimism, telling CNN, "That's a solid number. I believe that the labor market continues to perform well and is supporting income growth, which empowers consumers to upsurge their spending."
Indications of the labor market's resilience—which may suggest that the October report was an isolated incident—include the steady decline in layoff activity and a decrease in unemployment claims (after a temporary increase due to hurricanes).
Faucher said, "This suggests that the labor market is still doing quite well."
The number of job openings nationwide expanded to 7.7 million in October, from 7.4 million in September, according to the latest Job Openings and Labor Turnover survey. This figure surpassed economists' expectations of 7.5 million job openings for October, as per consensus estimates on FactSet.
Furthermore, the number of individuals leaving their jobs rose by 228,000 to 3.3 million in October, compared to the previous month. However, the number of job departures is down by 308,000 compared to the same time last year. Furthermore, the number of employees let go from their jobs also decreased in October, by 169,000 to 1.6 million from September.
Announcements of layoffs and jobless claims start to rise
The latest data for jobless claims also presents another perspective on the labor market: Hiring has slowed down.
The number of ongoing claims for unemployment benefits, filed by individuals who have received unemployment insurance for at least a week, has reached a three-year high.
The recent claims data, released Thursday morning, showed a drop in continuing claims. Nevertheless, the initial applications for jobless benefits (an indicator of layoffs) increased by 9,000 to reach 224,000, marking a six-week peak.
Despite the increase, initial claims have remained relatively steady in recent months and have remained under historical averages. Separately, Challenger, Gray & Christmas' most recent assessment of layoff activity demonstrated that announcements totaled 57,727 in November, showing a 3.8% rise compared to October.
Even with the rise, layoff activity remains relatively subdued. The layoffs and dismissal rate (layoffs as a percentage of total employment) was 1% in October, maintaining proximity to an all-time low, according to JOLTS data.
"Overall, we still have a tight labor market, and we see that layoffs are at historically low levels right now," Faucher said. "Businesses are hesitant to lay off employees. They're recruiting fewer, but they're not laying off. ... This is an excellent time to maintain a job."
Historical economic expansion
Despite the October data's complexity, the US labor market's performance in terms of employment expansion remains noteworthy: This period of employment growth is tied for the third-longest in history, as per BLS data.
Even a clear October report might have provided valuable insights into whether the labor market was losing strength or gaining it back, Claudia Sahm, chief economist at New Century Advisors, said to CNN a month ago.
Weaker-than-anticipated July and August employment reports (which were subsequently revised upwards) along with slowing inflation prompted the Federal Reserve to make rate cuts, which had become more attuned to the labor market's health.
"We remain confident that with an appropriate adjustment to our policy stance, we can maintain strength in the economy and the labor market, with inflation steadily decreasing to 2%," Fed Chair Jerome Powell said a month ago.
However, the coming weeks and months may alter the labor market, inflation, and overall economy's narratives.
Donald Trump, the President-elect, has promised to levy substantial tariffs (which economists say could have detrimental effects on US businesses and consumers). Moreover, he has promised mass deportations and immigration restrictions.
The resurgence of immigration following the pandemic has substantially contributed to monthly job gains.
"Labor supply has been one of the reasons the Fed has been able to lower interest rates to this point," Brett Ryan, senior US economist at Deutsche Bank, said in an interview. "If that equation changes, it's another reason not to cut. And our baseline projection is, we don't expect the Fed to cut again after the December meeting. We don't expect them to cut at all next year."
It's plausible that the initial 12,000 increase in employment recorded in October, which marks the smallest monthly progress in nearly four years, could be augmented.
The response rate for the establishment survey, one of the two surveys used to compile the monthly employment report, dipped to a measly 47.4% in October, according to BLS data. This is the lowest response rate since 1991 and falls significantly short of the average 65% response rate observed over the past four years.
Furthermore, the BLS did not modify its estimation methods for either the establishment or household surveys, thus allowing the raw data to dictate the outcome. This paves the way for the unimpressive 12,000-job increase to expand in the upcoming months.
Monthly employment estimates in the jobs report are classified as preliminary during their initial release because not all respondents submit their payroll data in a timely manner, particularly during periods of crisis such as this, where reporting data to BLS may not be their top priority while dealing with the aftermath of a storm.
These survey-based estimates undergo two revisions followed by a final hold until BLS applies its rigorous "benchmarking" procedure to align the estimates with quarterly tax filings.
The economic impact of these positive employment projections could lead to increased business activity, boosting the overall economy. Furthermore, with the job market showing resilience and businesses being hesitant to lay off employees, it can be expected that business confidence will also improve.