Unemployment in the U.S. unexpectedly declined

The U.S. unemployment rate unexpectedly fell to 3.7% in November, while the forecast was for it to remain at 3.9%. Monthly wage growth accelerated to 0.4%. The number of jobs in the non-farm sector in November increased by 199 thousand, while analysts expected an increase of 180 thousand. The market reacted with increased volatility.

 

On the monthly release, published at 16:30 MSC, the futures for S&P 500 in the moment reacted with a decline, but quickly recovered. The futures dynamics in the Russian market can now be recouped through the December (SFZ3) and March (SFH4) contracts, which are traded on Mosbirge. The US labor market is showing good data on key indicators. On the one hand, this is an argument in favor of maintaining high interest rates for a longer period of time, which is negative for the stock market. At the same time, the market does not believe in their further increase.

 

Already next week the Fed will hold its next meeting. According to FedWatch, the probability of the federal funds rate remaining at 5.25-5.5% is 98.2%, slightly less than estimated a day earlier. Expectations for next year have changed slightly, but only in terms of a slower transition to a rate cut.

 

Key components:

- Nonfarm Payrolls rose 199k (consensus forecast: 180k).

- Private sector growth was at 150k jobs (consensus forecast: 153k).

- The unemployment rate amounted to 3.7%. It was expected to be 3.9%.

- The average hourly wage rate rose 0.4% month-over-month (consensus forecast: 0.3%). On an annualized basis, the indicator added 4%, as expected.