November Jobs Report

Written By: Ryan Bouchey

The November jobs number was just released and it beat expectations by creating 211,000 jobs versus an expectation of 200,000 jobs. What added to the good news was that October’s surprisingly strong initial jobs number of 271,000 was raised to 298,000. On top of that, wage growth continued to rise, which may be the leading indicator of economic growth in this long, stagnant wage environment. All good news for the economy.

Leading the charge in November was construction as we continue to see the housing market improve. We also saw growth in healthcare, professional & technical services while seeing declines in mining. This isn’t too surprising given the strength of the dollar this year and the declining price of oil.

What does this mean going forward?

This was a big morning when it comes to the Federal Reserve’s December meeting and their decision on interest rates. Expectations have been that the Fed will raise rates in December. I’m sure the market (and maybe even the Fed at this point!) was looking for a reason to keep rates as is. A bad jobs report would have been just the excuse. But given the strength of the November jobs number beating expectations and October’s number being revised upward, I believe a December rate increase is likely.

We’ll continue to look closely at our fixed income holdings to see how they react to the pressures of an increasing interest rate environment. As we’ve seen in the past, equity markets have been strongly impacted by the Fed this past year and we’ll wait to see if a move to raise rates has been “built in” to current market prices. We still expect some volatility, but after seeing the futures market initially react positively this morning once the jobs number was released, it may be less than it has been all year.