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Instant view: US November payrolls rise falls far short

·3 min read
FILE PHOTO: Signage for a job fair is seen on 5th Avenue after the release of the jobs report in Manhattan, New York City

NEW YORK (Reuters) - U.S. employment increased far less than expected in November, likely as millions of unemployed Americans remained home despite companies boosting wages, generous jobless benefits expiring and schools fully reopening.

Nonfarm payrolls increased by 210,000 jobs last month, the Labor Department said on Friday. Economists polled by Reuters had forecast payrolls advancing by 550,000 jobs. Data for October was revised up to show employment rising by 546,000 jobs instead of 531,000 as previously reported. The unemployment rate dropped to 4.2%, the lowest since February 2020, from 4.6% in October. Wages increased further.

MARKET REACTION:

STOCKS: S&P e-mini futures extended slight gains and were up 0.22%, pointing to a steady open on Wall Street

BONDS: The yield on the benchmark 10-year note rose to 1.5546%. Two-year Treasury yields rose to 0.6369%

FOREX: The dollar index was up 0.1%

COMMENTS:

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“It’s a market that’s healing but healing at an uneven level. The reason we have the drop in unemployment is people dropping out the workforce and that’s not a good sign. This is significant, in that the if Fed abandons its full employment standard - which they probably will due to wage inflation concerns - it means that even though this is a disappointing report, the Fed is not likely to alter its accelerated tapering pace and could begin raising rates in the second quarter.

"The bottom line is it’s a disappointment.”

JIM VOGEL, INTEREST RATE STRATEGIST, FHN FINANCIAL, MEMPHIS, TENNESSEE

“Right now, people are sorting through the really good numbers in the household survey, and for now they are reducing their emphasis on the big payroll miss. It’s not completely unusual for the official business survey to be a bit wonky and that’s why we’ve seen so many upward revisions and that’s part of the feel. We are trading not only the payroll number this morning, but we are still trading Powell’s confident expression that tapering is a good idea from Tuesday, and we’re working on the premise that they’ve come to some pretty firm conclusions regardless of fourth quarter data.”

JJ KINAHAN, CHIEF MARKET STRATEGIST, TD AMERITRADE, CHICAGO

“So we’re going to have the unemployment rate fall by 0.4% but miss on the top line number – something doesn’t add up. As I was looking through the sectors, the sectors that don’t truly make sense to me are leisure and hospitality up so small and retail being down, which is very odd for this time of year. So I’m wondering if we are going to see some revisions going forward on those two because those just don’t add up with everything else I am seeing. Because you did get some strong numbers out of warehousing again, which is great, professional services, construction, manufacturing – all the areas you want to see growth we are seeing it, which is fantastic.”

“The futures seemed to like it, that top-line number, maybe people are thinking that although Powell talked this week about the taper maybe this slows the pace or slows them starting it.”

“Pretty significant revisions in September - 67,000 more, October 15,000 more. Something is very odd about this report.”

“The rally here may be top line related but when you add that top line with the employment rate it is hard to square the circle so we’ll see if the buying momentum can last off of that. There are two other things at work - the volatile week in general, this could be a little momentum from yesterday. And two weeks from today is quadruple witching, we also have the end of the year coming up, so you do have people already starting to adjust their portfolios in a bigger way.”

(Compliled by the global Finance & Markets Breaking News team)

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