Job growth in the U.S. slowed significantly last month, with non-farm payrolls rising by only 210,000 in November, down from 546,000 in October. This was less than half of the 550,000 consensus forecast
The U.S. dollar sold off when the numbers came out but recovered quickly for three reasons:
- 1. The unemployment rate dropped to 4.2%, its lowest level since the pandemic. Economists had been looking for a more modest improvement, but the uptick in the participation rate tells us that this was not a reflection of workers dropping out of the labor force.
- In total, the U.S. economy has recovered more than 80% of the jobs lost since the pandemic.
- Federal Reserve rate hike expectations remained intact, with the futures market pricing in 25bp hike in June and 50bp hike in November. While we are not enthused by the slowdown in average hourly earnings, the U.S. dollar recovered its losses quickly because there’s enough good news in today’s report for the Fed to accelerate its taper plans this month. Service sector activity also.