Image source: Dmitrii Shironosov © 123RF.com
The November non-farm payrolls report turned out to be exceptionally positive, illustrating a substantial improvement in the local labour market conditions during the previous month.
According to the Bureau of Labor Statistics (BLS), the American economy has added 266 thousand new jobs, which measures a marked improvement compared to the 156 000 job openings that were recorded in October.
The observed performance has also managed to surpass the initial consensus forecasts, which projected an increase in employment by only 181 thousand new job openings.
Subsequently, the US unemployment rate fell to 3.5 per cent in November from the 3.6 per cent that was recorded a month before.
US Unemployment Rate. Image source: TradingEconomics.com
The initial market forecasts projected no change in headline unemployment, which is yet another attestation to the robust performance of the US labour market at the end of Q4.
Thus, the unemployment rate has once again fallen to its lowest level since 1969.
The report revealed some interesting developments in the American economy, which can have a significant impact over the first quarter of 2020.
“Job growth has averaged 180,000 per month thus far in 2019, compared with an average monthly gain of 223,000 in 2018. In November, notable job gains occurred in health care and in professional and technical services. Employment also increased in manufacturing, reflecting the return of workers from a strike. […] In November, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $28.29. Over the last 12 months, average hourly earnings have increased by 3.1 percent.”
The first major finding of the labour report is the admission that employment in manufacturing is once again picking up, which should have a positive effect in the overall industry.
This is especially welcoming news given that manufacturing has been underperforming recently, and analysts expect an improvement to be registered by the end of 2019.
You can read more about the consequences of the most recent ISM Manufacturing report on the American economy here.
Additionally, the rate of wage growth has more than doubled in November compared to the previous 12 months, which is also indicative of rising price stability within the economy.
Consumer sentiment and consumer spending can be anticipated to pick up steam over the festive period, which would likely further bolster the stock market and the major indices in the US.
Meanwhile, the S&P 500 rebounded from its recent dip, as the priced bounced back to around 3150 driven by the robust NFP data.
The anticipated heightened consumer spending over the holidays in addition to the presumably strengthening manufacturing industry should further support the index.
Its price is more than likely to surpass its previous record of 3154.3 by the end of the year.
S&P500 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
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