VOT Research Desk
Wells Fargo analysts expect job growth to moderate further in November and the next month, ahead of the next official US jobs data, which is out next week. They emphasize the importance of wage statistics for the Federal Reserve.
Nonfarm payrolls increased by 261K in October, exceeding expectations once more. However, there were some indications in the data that fractures are forming in the labor market.
Technical issues associated with the birth-death model appear to be inflating headline nonfarm payroll figures.
Employment declined by 328K in October, according to the household survey, and the labor force participation rate fell back to where it was at the start of the year. We expect job growth to slow further in November and future months. According to first jobless claims and the JOLTS data, layoffs remain modest, but discharges account for only half of the net hiring equation.
The need for more labor appears to be dwindling. Since the spring, job postings, hiring plans, PMI employment sub-components, and consumer perceptions of the labor market have all declined. Aside from the headline figures, the average hourly earnings data will be critical for Federal Reserve policymakers.
Returning inflation to 2% would need more than just stabilizing supply chains, and slower wage growth is a key component of the equation.
