In November, 263,000 jobs were created in the United States. The pace of creation continues to decline, but at a slower pace than expected, despite the Federal Reserve's aggressive monetary policy to fight inflation. Hourly wage growth has also accelerated.
The American "job machine" continues to fuel, but this does not please everyone. In November, 263,000 jobs were created in the United States, 60,000 more than analysts expected. Admittedly, this is the lowest figure in a year, and it is down 21,000 creations compared to October. But the decline is slower than expected, despite the Federal Reserve's aggressive monetary policy since March. The news immediately sent Wall Street tumbling.
Investors in a hurry to end rate hikes fear that buoyant employment will push the Fed to step up or extend its current policy. "The labor market remains far too hot for the Fed's liking, and it will take much slower employment and wage growth to bring inflation back to the central bank's 2% target in a sustainable way," Wells Fargo said.
By raising the cost of credit, the US central bank seeks to "cool" the economy. And to measure the effectiveness of its policy, it has its eyes riveted on two indicators in particular: the rise in prices, which it has managed to moderate but which remains excessive at 8.2%, and that of wages, which is driven by an economy in full employment - the unemployment rate of 3.7% did not move in November.
Average hourly wage growing by 5.8% per year
Average hourly earnings jumped 0.6% in November, the largest increase in 13 months. It was also revised upwards for the previous two months. This is good news for employees – although it is not enough to compensate for the loss of purchasing power due to the high cost of petrol or food – but bad news for the fight against inflation. "Over the past three months, average hourly earnings have grown 5.8% annualized, still significantly above the rate of 3 to 3.5 percent that would be consistent with inflation at 2 percent," Wells Fargo calculates.
On Wednesday, Fed Chairman Jerome Powell reiterated that the fight against inflation was far from won and that it would require further rate hikes, including next year. However, he reassured investors that their level could be more modest as early as December. On 14 December, policy rates could therefore be raised to a maximum of 4.50%, rather than 4.75%. But Friday's statistic still takes the end of the bullish tunnel away.
Announcements of redundancies multiply
The surprise is all the greater, as announcements of job cuts have multiplied in recent weeks in the United States. The tech sector, which had recruited at arm's length last year, launched the movement, with Twitter, Meta, Amazon, and Snap. Departure plans have also been announced in several major banks, from Goldman Sachs to Wells Fargo, or in the media, at Disney, AMC Networks, and CNN. It is mainly SMEs that are laying off, with 305,000 job losses in companies with less than 10 employees in October, against 137,000 the previous month.
Perhaps the downturn in the labour market will accelerate soon, lagging behind monetary initiatives. It was learned on Thursday that the manufacturing production index fell in November in the United States, for the first time since May 2020, following three months of slowing orders.
Ultimately, the effectiveness of restrictive monetary policy is limited by the Biden administration's new spending to reindustrialize the country, and by a shortage of 3.5 million workers in the United States. Jerome Powell is not at the end of his troubles.
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