A hotter-than-expected reading for wage gains in Friday’s November jobs report has reignited inflation concerns in the world’s biggest economy.
Updated at 8:48 am EST
The U.S. economy added more new jobs than expected last month, the Labor Department said Friday, as wages jumped higher amid solid private-sector gains, sending stocks sharply lower in pre-market trading.
The Bureau for Labor Statistics said 263,000 new jobs were created last month, well ahead of the Street consensus forecast of 200,000. Private payrolls were up 221,000, the BLS said, as the unemployment rate held at 3.7%. The BLS also revised its September jobs addition estimate to 319,000 from its original estimate of 263,000.
The BLS noted that hourly wages were up 0.6%, the biggest monthly gain since last year and topping Street forecasts of a 0.4% gain. On a year-on-year basis, wages were up 5.1%, slowing from last month’s 5% pace.
Federal Reserve Chairman Jerome Powell said earlier this week that the job market “holds the key to understanding inflation“, citing data that suggests as many as 10.3 million positions remain unfilled as of the end of October.
“In the labor market, demand for workers far exceeds the supply of available workers, and nominal wages have been growing at a pace well above what would be consistent with 2 percent inflation over time,” Powell told the Brookings Institution. “Thus, another condition we are looking for is the restoration of balance between supply and demand in the labor market.”
U.S. equity futures extended earlier declines following the data release, with the Dow Jones Industrial Average indicating a 415 point opening bell decline and those linked to the S&P 500 showing a 65 points slump from last night’s close.
Benchmark 10-year Treasury note yields were around 10 basis points higher at 3.621% while 2-year notes jumped to 4.377%. The CME Group’s FedWatch suggests a 69% chance of a 50 basis point rate hike later this month in Washington, down from 77% prior to the data release.
Earlier this week, payroll processing group ADP said private hiring slowed to around 127,000 new positions last month, the lowest tally since January of last year and well shy of Street forecasts of around 196,000.
New applications for unemployment benefits, however, fell by 16,000 to 241,000 last week, the Labor Department said yesterday, amid the second-lowest year-to-date tally for layoffs — around 321,000 — on record.
