U.S. employers added a better-than-expected 228,000 jobs in November, the Labor Department said Friday, Dec. 8, but wage growth slowed and the headline unemployment rate remained unchanged at 4.1%, suggesting a complex jobs market that may not justify faster rate hikes from the Federal Reserve.
Hourly earnings were 0.2% higher than October, the release indicated, and only 2.5% higher on the year, a figure that missed economists' forecasts and could tame recent gains for the U.S. dollar as investors prepared for the Fed's final policy meeting of the year next week in Washington. The October reading was revised lower, to 244,000 from an an initial estimate of 261,000.
U.S. stocks jumped higher at the opening bell with the Dow Jones Industrial Average rising 65 points higher as investors bet on further monetary stimulus that won't be blunted by faster rate hikes from the Fed. The S&P 500 added 10 points, or 0.31%, while the Nasdaq was marked 48 points, or 0.71% to the upside.
Analysts at Goldman Sachs had expected wage growth of 0.3% on the month and an annual rate of 2.7% "with risks skewed to the upside, reflecting a boost from unwinding hurricane distortions and somewhat favorable calendar effects", the bank said.
Wage growth, or the lack of it, remains one of the key puzzles for central bank policy makers around the world, including the outgoing Fed Chair Janet Yellen, who told the Joint Economic Committee of Congress last week that while "17 million more Americans are employed now than eight years ago ... wage growth has remained relatively modest."
Bond markets, however, had been adjusting for the likelihood of faster wage growth from the November report, with benchmark 10-year U.S. Treasury yields rising around 3 basis points overnight to 2.38%, a move that raises the difference between 2-year and 10-year note yields to around 57 basis points.
The U.S. dollar index, which benchmarks the greenback against a basket of six global currencies, fell 0.22% to 93.81 following the release after gaining gaining more than 1% to a two-week high of 94.02 in anticipation of not only faster rate projections from the Fed, but also the impact of any fiscal stimulus that would come from an agreement on tax reform between Republican lawmakers in the House and Senate.
Without mentioning any tax-led stimulus, Yellen told the JEC last week that she expects "with gradual adjustments in the stance of monetary policy, the economy will continue to expand and the job market will strengthen somewhat further, supporting faster growth in wages and incomes."
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