AT A GLANCE

• The U.S. Bureau of Labor Statistics will release its November Employment Situation Summary, or Jobs Report, on Dec. 2

• The Dec. 2 Jobs Report is the last monthly employment report before the Fed’s final policy meeting of the year, but it’s just one piece of the puzzle

A plethora of economic data may indicate the condition of the job market and overall consumer confidence, while also offering insights into the direction of inflation.

In addition, the “second” estimate of third quarter GDP from the Bureau of Economic Analysis corroborated that the U.S. economy has rebounded after shrinking during the first half of the year, despite sharply rising interest rates and inflation that has stubbornly remained near a 40-year high. 

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Speaking of, the Core Personal Consumption Expenditure Price Index, which is the Fed’s preferred measure of inflation, rose 0.2% in October, up 5% from a year ago. While the report did indicate a softening in core inflation, the annual pace is still more than double the Fed’s goal.

Meanwhile, the number of new unemployment claims have been hovering near historic lows due to the tight labor market. Weekly jobless claims tend to be more volatile around the holiday season, and the most recent report for unemployment benefits showed a decline to 225,000. This decrease came a week after Labor Department data showed jobless claims at their highest since Aug. 13.

Finally, we get to the big one on Friday: the last monthly employment report before the Fed’s final policy meeting of the year. The Jobs Report is forecast to show 200,000 payroll additions in November, with unemployment remaining steady at 3.7%. The report is also forecast to show subsiding hourly earnings growth at a 4.6% annual increase, which would be the smallest since August 2021.

The rationale seems to be that if the employment report is stronger than anticipated, the market may not digest it well because of concerns that the Fed might remain aggressive with rate hikes. On the contrary, a weaker print may increase hopes that the Fed may start reducing both the size and amount of future rate hikes.

In summary, the monthly employment report, though a critical one, is just one piece of the jigsaw puzzle the Fed uses to determine the direction and velocity of the interest rates environment.

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