The unemployment rate is expected to remain on track to undershoot FOMC forecasts but the Fed can still cut this month
Executive Summary
- Nonfarm payrolls growth is expected to bounce sharply to 215k in November in the reversal of October’s strike and weather-related disruption saw a much weaker than expected 12k.
- Revisions will be watched particularly closely after a historically low initial response rate last month, with broad expectations for an upward revision.
- The reversal of strike impact is well known but there’s a wide range of estimates for the initial hit weather, with analyst estimates for a rebound this month ranging from 25k to 110k.
- Analysts are split down the middle in calling for a 4.1% or 4.2% unemployment rate in November after the 4.145% in October. It looks likely the FOMC’s dovish shift to a 4.4% forecast for 4Q24 will be undershot.
- Governor Waller this week made about as explicit an indication as we've received that the base case for the FOMC is to cut again, unless incoming data surprises to the strong side.
- We expect a soft payrolls report to cement expectations of a 25bp cut from the FOMC on Dec 18 (currently 18.5bp priced in Fed Funds futures) whilst a strong report would see next week’s CPI as the decider.
PLEASE FIND THE FULL REPORT HERE: USNFPDec2024Preview.pdf
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