Evelyn Reynolds

The Bureau of Labor Statistics is expected to report Friday that nonfarm payrolls increased by 214,000 in November, a significant step up from the meager 12,000 gain in October.
This will be the last comprehensive look the Federal Reserve will get before its next policy meeting on Dec. 17-18.
Getting a clear picture for the Fed is essential now as policymakers look to recalibrate policy at a time when inflation rates are elevated but easing, and focus has increased on the labor market.

A pedestrian walks by a ‘hiring now’ sign in front of a U-Haul store on December 03, 2024 in San Rafael, California. 
Justin Sullivan | Getty Images

After a month in which hiring was essentially muted due to storms and strikes, the jobs report due out Friday could provide a clearer picture of where the labor market is headed.
The Bureau of Labor Statistics is expected to report Friday at 8:30 a.m. ET that nonfarm payrolls increased by 214,000 in November, a significant step up from the meager 12,000 gain in October. That month’s reading was the worst for job gains since December 2020.

One of the things that will make the report so pivotal is it will be the last comprehensive look the Federal Reserve will get before its next policy meeting on Dec. 17-18. Markets are betting heavily that the Fed will approve another quarter-percentage-point interest rate cut, but that could change depending on how the jobs count plays out.
“Well, it should be a pretty healthy number, because it should bounce back from [October] when we had [Hurricane] Milton and the [Boeing strike] holding down jobs,” said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research.
In fact, the October number could get pushed higher after BLS surveyors go back and recheck the month’s data. Revisions to the payrolls reports sometimes have been massive in the post-Covid period.
That could add to a messy couple of months with economic data and make the Fed’s job more challenging.
“I would expect it to be over 200,000, and the risk would probably be to the upside if we get a real rebound,” Jones said. “But I’m not sure that this jobs report will tell us much, either, because of all the weather effects up and down. Is it really going to give us a clear view of the future, or is it just going to be more muddy data to deal with?”

Important for the Fed

Getting a clear picture for the Fed is essential now as policymakers look to recalibrate policy at a time when annual inflation rates are elevated but easing, and focus has increased on the labor market.
Aside from the October report, the jobs picture has been showing a mostly slower trend since around April, with payroll gains averaging about 128,000 new jobs a month as the unemployment rate has drifted up to 4.1%. Fed policymakers want to take their benchmark short-term borrowing rate down to a more neutral level as they balance their focus between inflation and employment.
“This is absolutely going to be noisy, because a storm and strike disruption affects two months’ worth of data, the data for the month in which people aren’t working and the next month when they return to work,” said BNY economist Vincent Reinhart, a former Fed official who served 24 years at the central bank.
“The way the Fed sees it is that the slowing in nonfarm payrolls over the course of 2024 was basically settling to trend — trend being something a little above 100,000 jobs created a month — and that was not worrisome,” he added. “It was actually welcome, because, you know, trend is sustainable.”
Indeed, the most recent signals point to a job market leveling off but not worsening.

State of the labor market

Initial weekly unemployment insurance claims have held in a fairly steady range around 220,000, though continuing claims earlier in November had hit their highest level in about three years. Together, the numbers indicate that companies are not laying off workers en masse but also aren’t rehiring those who do lose their jobs.
A Fed economic report Wednesday — its “Beige Book” summary of current conditions — described hiring as “subdued as worker turnover remained low and few firms reported increasing their headcount.” The report said layoffs are “low” but employers indicated caution about the future pace of hiring, with more enthusiasm about entry-level workers and skilled trades.
Job openings increased in October while the hiring rate fell and those leaving their jobs voluntarily increased, according to BLS data this week.
The Fed will have to weigh all of those factors, plus worries about rising inflation, when it makes its rate decision and lays out its outlook for the future.
If the labor market can remain steady, then it shouldn’t put additional pressure on inflation, Reinhart said. “So the strategy is, try to get demand at trend, because if growth and demand are at trend, then you should preserve the current state of the labor market, and the labor market is roughly in balance,” he added.
In addition to the headline payrolls gain, the unemployment rate is expected to nudge up to 4.2% as the labor force sees re-entrants from October. Also, average hourly earnings are expected to rise 0.3% on the month and 3.9% from a year ago, both down slightly from the previous month. More

President-elect Donald J. Trump threatened to impose tariffs on countries that seek to replace the dollar in trade or undermine its global reserve currency status.When Republicans nominated Donald J. Trump to be their presidential candidate over the summer, the party’s platform included a pledge to maintain the role of the United States dollar as the world’s reserve currency.Since winning the election, Mr. Trump has indicated that he wants to deliver on that promise. Over the last week he warned that if the group of nations known as BRICS countries — which include Brazil, Russia, India, China and South Africa — tried to create their own currency to rival the dollar, he would punish them with 100 percent tariffs and shut them out of U.S. markets.“There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America,” Mr. Trump wrote on social media.The warning was intended to preserve the dollar’s premier status, but economists and analysts suggested that it could have the opposite effect. Although it appears unlikely that the BRICS would be able to create their own currency, the aggressive use of tariffs and sanctions by the United States is the reason that other nations have increasingly been considering alternatives to the dollar. By making such threats, Mr. Trump could end up accelerating that trend.“Threatening retaliation against the unlikely creation of a BRICS currency only reinforces the rest of the world’s concerns about the U.S. willingness to wield dollar dominance as an economic and geopolitical weapon,” said Eswar Prasad, the former head of the International Monetary Fund’s China division. “This will intensify other countries’ attempts to diversify away from use of the dollar for international payments and for foreign exchange reserves.”The dollar has been the world’s dominant currency for about a century and has served as the world’s reserve currency since the end of World War II. It makes up the majority of foreign exchange reserves held in global central banks and is widely used in international transactions such as trade and loans.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Paul Atkins, founder and chief executive officer of Patomak Global Partners LLC, speaks during a Bloomberg Television interview at the Milken Institute Global Conference in Beverly Hills, California, U.S., on Monday, May 1, 2017. 
David Paul Morris | Bloomberg | Getty Images

President-elect Donald Trump, keeping with his promise for a crypto-friendly administration, plans to nominate former SEC Commissioner Paul Atkins to head the agency, according to a Truth Social post.
Currently the CEO at Patomak Global Partners, Atkins is a well-known veteran of the financial world and Republican political circles specifically. He had been widely expected to get the position as the nation’s top financial market regulator.

If confirmed, Atkins would succeed Gary Gensler, a widely reviled figure in the digital currency community for his many efforts to clamp down on the $3.5 trillion crypto market. Trump has promised a easier path for bitcoin and its myriad peers, and the market has soared since his election victory on Nov. 5.
“Paul is a proven leader for common sense regulations. He believes in the promise of robust, innovative capital markets that are responsive to the needs of Investors, & that provide capital to make our Economy the best in the World,” Trump said in a statement. “He also recognizes that digital assets & other innovations are crucial to Making America Greater than Ever Before.”
Trump’s position on crypto mirrors his larger pro-deregulation stance prevalent during his first time in office.
Atkins served as SEC commissioner from 2002-08, under then-President George W. Bush. Before that, he also had served in other roles at the regulatory body in the division of corporate finance.
Along with adopting a pro-crypto stance, the prospective nominee was critical of some of the reforms that emerged from the global financial crisis in 2008. Specifically, he criticized the Dodd-Frank legislation as too burdensome on the banking industry.

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An attendee holds pamphlets at the Albany Job Fair in Latham, New York, US, on Wednesday, Oct. 2, 2024. 
Angus Mordant | Bloomberg | Getty Images

Private payrolls growth was less than expected in November, reflecting a slowing labor market, according to a report Wednesday from ADP.
Companies added 146,000 on the month, below the downwardly revised 184,000 in October and less than the Dow Jones estimate for 163,000.

Education and health services led job creation, adding 50,000 positions on the month. That was followed by construction with 30,000 new jobs, trade, transportation and utilities with 28,000 additions, and the other services category, which contributed 20,000 jobs.
Manufacturing lost 26,000 positions on the month. Businesses with fewer than 50 employees also reported a drop of 17,000.
Wage growth accelerated, by 4.8%, a faster gain since October, the first time that has happened in 27 months.
“While overall growth for the month was healthy, industry performance was mixed,” ADP chief economist Nela Richardson said. “Manufacturing was the weakest we’ve seen since spring. Financial services and leisure and hospitality were also soft.”
Even with the lower than expected total and downward October revision, ADP’s count was still well ahead of the Bureau of Labor Services’ more closely watched nonfarm payrolls count, which showed an increase of just 12,000 jobs in October. The BLS report will be released Friday and is expected to show growth of 214,000, according to Dow Jones, after the Boeing strike and storms in the Southeast lowered the October totals. More

Bank of England Governor Andrew Bailey hinted that four interest rate cuts could be in the pipeline over the coming year.
Bailey told the Financial Times that inflation had come down faster than the central bank had been anticipating.
Markets are currently pricing in three rate cuts from the Bank of England over the next year, with investors expecting the institution to hold rates steady at its December meeting.

Andrew Bailey, governor of the Bank of England, at the central bank’s headquarters in the City of London, U.K., on Nov. 29, 2024. 
Hollie Adams | Bloomberg | Getty Images

Bank of England Governor Andrew Bailey on Wednesday signaled that the U.K. could be on track for four interest rate cuts over the next year, if inflation continues on a downward path.
Asked during a Financial Times video interview whether the central bank would be poised to carry out four quarter-point cuts over the coming year, if its projections of “a little bit of [inflation] persistence” come to fruition, Bailey responded, “Exactly.”

Markets are currently pricing in a hold on interest rates at the Bank of England’s December meeting, according to LSEG data, followed by three 25-basis-point rate cuts. If all four trims materialize, they would bring down the bank’s key interest to around 3.75%, adding to the two BoE reductions this year to date. The institution began cuts over the summer, with Bailey telling reporters in November that the bank would need to take a “gradual” approach to lowering rates.
“Monetary policy will need to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target over the medium term have dissipated further,” he said at the time.
Surveying the inflation picture on Wednesday, the BoE governor added that consumer prices had come down faster than the central bank had anticipated.
“A year ago, we were saying that inflation today would be around 1% higher than it actually is,” he said during the interview. “And that, I think, is a good test of the [central banking] regime.”
U.K. inflation surprised markets with a rise to a sharply higher-than-expected 2.3% in October, up from the 1.7% of September.

Sterling was trading flat on Wednesday morning, reaching $1.2671 by 11:52 a.m., erasing some of its earlier losses.
Meanwhile, the yield on the U.K.’s 10-year gilts was flat at around 4.273%. More

French lawmakers will hold a vote of no-confidence in the fragile minority government of Prime Minister Michel Barnier on Wednesday which is expected to pass.
Economists warned that the lack of a fresh 2025 budget would set the country’s deficit higher, spur higher bond yields and deter international investors.
The political turbulence comes as Germany heads for its own no-confidence vote, adding to headwinds for the euro.

A pedestrian crosses a flooded street following heavy rainfall in Paris on October 17, 2024.
Joel Saget | Afp | Getty Images

French lawmakers will hold a no-confidence vote in the fragile minority government of Prime Minister Michel Barnier on Wednesday, as economists warn the political stalemate likely to ensue will come at a high economic cost.
Two so-called “motions of censure” filed by both the left-wing and far-right opposition parties will be debated and voted on from 4 p.m. local time. The administration is widely seen as likely to be ousted, just three months after it was formed. If the government collapses, Barnier — who failed to find compromise within the heavily-divided National Assembly to pass a 2025 budget bill aimed at reducing the hefty French deficit — will then be forced to tender his resignation to President Emmanuel Macron.

From there, uncertainty reigns. Macron will eventually need to name a new prime minister, after already struggling to make such an appointment in the wake of the snap summer election which delivered the most votes to the left-wing coalition, but did not give any party a majority. Long-time minister Barnier had been seen as a technocratic compromise.
“Once Barnier resigns, Macron will likely ask him to continue as a caretaker. The alternative option of formally renominating Barnier looks unlikely given the manifest lack of a majority,” Carsten Nickel, deputy director of research at Teneo, said in a Tuesday note.
This caretaker status could drag on for months, since fresh elections cannot be held until next year, while another possibility is Macron’s resignation triggering presidential elections within 35 days, Nickel said.

French budget surprises with focus on tax hikes as analysts warn of ratings downgrades

He added that such a series of events would leave the budget bill unpassed, with a last-minute deal appearing improbable.
The caretaker government is therefore likely to present a special constitutional law which would “effectively roll over the 2024 accounts without any of the previously envisaged spending cuts or tax hikes, while empowering the government to keep collecting taxes,” he said.

Amid the turmoil, French borrowing costs are climbing while the euro has been caught up in negative sentiment — exacerbated by bleak manufacturing data from the euro area and concurrent political volatility in Germany.
“France is facing a prospect of a growing fiscal deficit that will become more expensive to finance as their [government bond] yields rise amid this uncertainty,” analysts at Maybank said in a note Wednesday.

Deficit challenge

To international investors, the situation in France looks “very bad,” Javier Díaz-Giménez, professor of Economics at Spain’s IESE Business School, told CNBC by phone.
“Without a budget, they really would default, not because they can’t pay interest on their debt, but because they won’t without a budget. Ratings agencies are already putting in warnings, 10-year French bonds have a higher premium than Greece’s, which is crazy in terms of fundamentals,” he said. Greece had briefly lost its investment grade credit rating status amid the euro area debt crisis, which led to the nation’s sovereign default.
“But that’s because pension funds don’t care, they just want an assured steam of revenue with no concerns about legal shenanigans. So they will dump [French bonds] and go elsewhere,” Díaz-Giménez said.

“Beyond economic growth and stability, this will send debt in a non-sustainable direction in France.”
Economists had already trimmed their growth forecasts for France following the publication of the budget proposal in October, given its sweeping tax hikes and public spending cuts.
Analysts at Dutch bank ING, who previously forecast French growth slowing from 1.1% in 2024 to 0.6% in 2025, said Tuesday that the fall of Barnier’s government “would be bad news for the French economy.”
They also predicted the passing of a provisional budget mirroring the 2024 framework.
“Such a budget will not rectify the trajectory of public spending,” they said, throwing out Barnier’s target of reducing the public deficit from 6% of GDP to 5% in 2025 — which would mean France would not move toward meeting the European Union’s new fiscal rules.

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“At a time when economic growth in France is slowing markedly, this is bad news. The public deficit will remain high, debt will continue to grow and the next government – whenever that may be – will have an even tougher task to put public finances right,” the ING analysts said.
Gilles Moëc, group chief economist at AXA, observed in a note Monday that “France can count on large reserves of domestic savings to replace international investors, and the euro area dataflow helps to decouple European from US yields, but in the medium run, directing too much of domestic savings to funding the government can become costly in terms of growth dynamics.”

Here’s how investors are trading France’s political chaos

“Consumer confidence has already declined, and the savings rate could rise further, thwarting the rebound in consumption on which the government is counting to support tax receipts in 2025,” Moëc said.

German comparison

While both countries are mired in their political turbulence, the spread between France’s borrowing costs over those of Germany stretched to a fresh 12-year high this month.
However, Díaz-Giménez of IESE Business School said that in some ways, the French outlook was more positive than that of the euro area’s largest economy.
“In France, economic prospects are pretty bleak, but it’s not going to be a disaster if ancillary risks can be avoided. The high fiscal deficit is hard to fix and requires political harmony but they could still find a way through, it just puts pressure on politicians to do their jobs and solve the real problems, in this case fiscal sustainability,” he told CNBC.
“But in Germany the problem is growth. The German economy needs major adaptation to a new environment without Russian gas and in which making cars in Europe looks like a really bad business plan. From an economic point of view, that is harder to solve than the French problem.”

Barclays prefers Germany over France as it sends ‘bond vigilante’ warning More

A plan by the Biden administration would phase out a provision that allows employers to pay workers with disabilities less than the federal minimum wage.The Biden administration on Tuesday moved to end a program that has for decades allowed companies to pay workers with disabilities less than the minimum wage.The statute, enacted as part of the Fair Labor Standards Act of 1938, has let employers obtain certificates from the Labor Department that authorize them to pay workers with disabilities less than the federal minimum wage, currently $7.25 an hour. The department began a “comprehensive review” of the program last year, and on Tuesday it proposed a rule that would bar new certificates and phase out current ones over three years.“This proposal would help ensure that workers with disabilities have access to equal employment opportunities, while reinforcing our fundamental belief that all workers deserve fair compensation for their contribution,” Taryn Williams, assistant secretary of labor for disability employment policy, said on a call with reporters.As of May, about 800 employers held certificates allowing them to pay workers less than minimum wage, affecting roughly 40,000 workers, said Kristin Garcia, deputy administrator of the Labor Department’s wage and hour division.Those figures reflect a steep decline in employers’ reliance on the program in recent years: The number of workers with disabilities earning less than the minimum wage dropped to 122,000 in 2019 from 296,000 in 2010, according to a report published last year from the Government Accountability Office.Since 2019, more than half of workers employed under this program earned less than $3.50 an hour, according to the report.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Job openings totaled 7.74 million on the month, up 372,000 from September.
Hiring tailed off at a time when the labor market was disrupted by violent storms in the Southeast as well as two major labor strikes involving dockworkers and Boeing.

Available jobs rose in October while hiring fell during a month in which payrolls growth hit its lowest level in nearly four years, the Bureau of Labor Statistics reported Tuesday.
Job openings totaled 7.74 million on the month, up 372,000 from September and more than the Dow Jones estimate for 7.5 million, the BLS said in its Job Openings and Labor Turnover Survey. The rate of openings as a share of the labor force rose to 4.6% from 4.4%.

That brought the ratio of available positions to unemployed workers up to 1.1, about half of where it was during the peak of a massive gap between supply and demand in 2022.
Hiring also tailed off at a time when the labor market was disrupted by violent storms in the Southeast as well as two major labor strikes involving dockworkers and Boeing. Hires totaled 5.31 million, down 269,000 on the month, lowering the hiring rate to 3.3%. That’s also a decline of 0.2 percentage point.
Layoffs, though, fell to 1.63 million, a decrease of 169,000 from September. Also, voluntary job quitters increased to 3.33 million, up 228,000 from September.
The data comes for a month in which the BLS reported nonfarm payroll growth of just 12,000, the worst month since December 2020.
The Federal Reserve watches the JOLTS report closely for signs of tightness or slack in the labor market. Markets expect the Fed to lower its benchmark borrowing rate by a quarter percentage point when it meets later this month, in part an effort to head off any potential weakness in the labor market.

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