December 1, 2023

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Job Market Data Will Usher in the New Year’s Economic News | Economy

As 2023 begins, economic data out this week will offer a look at how the economy ended 2022 and whether the job market is finally bowing to slower growth and higher interest rates.

First up on Wednesday, the Bureau of Labor Statistics will release the jobs openings numbers for November, with expectations that there were 10 million positions open compared to 10.3 million in October. The number peaked at 11.9 million in March of last year.

Thursday will offer a report on December’s private sector employer payrolls from ADP. Estimates are calling for an increase from November’s addition of 127,000 jobs. There will also be the weekly update on the number of people filing first-time claims for unemployment benefits.

Then the main event on Friday is the monthly jobs report for December. Economists are looking for a drop from November’s 263,000 gain, with consensus forecasts calling for a number close to 200,000.

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“The highlight as is usually the case the first week of each month will be Friday’s employment report,” Sam Bullard, managing director and senior economist at Wells Fargo Corporate & Investment Banking, wrote on Sunday. “We look for nonfarm payrolls to have moderated further in December, adding 205K as compared to November’s pace of 225K.”

“Secondary employment measures have been mixed, but continue to support the notion of positive monthly employment growth, albeit at a slowing pace,” Bullard added. “We project the unemployment rate to remain steady at 3.7% for a third straight month, as job openings have pulled back from March’s peak which, in turn, has helped lead to a slight slowdown in the pace of hiring.”

Sandwiched in among the jobs data will be the minutes of the Federal Reserve’s December meeting where the central bank approved a 50 basis point hike in interest rates. The step down from the prior run of 75 basis point increases was expected and Chairman Jerome Powell’s comments that the Fed was not done raising rates gave little hope for those looking for a pause in its aggressive campaign fighting inflation.

In particular, the Fed is looking to the labor market to cool down more as evidence that the imbalance between supply and demand is easing and, with it, wage pressures on employers that are contributing to inflation.

Markets were signaling a positive open Tuesday, following the day off for observation of New Year’s Day on Monday. Dow Jones Industrial Futures were up by more than 100 points in pre-market trading while yields on government bonds were down slightly. Markets may be hoping the worst of the Fed’s damage is done, but that could be wishful thinking.

More than usual, the economic environment entering 2023 is fraught with perils coming from outside Wall Street and Main Street. Congress is now divided, but the victorious Republicans who take over the House are in a bare-bones fight over whether to elect Kevin McCarthy as their leader as speaker. The war in Ukraine is ongoing, with a deadly attack on Russian troops over the weekend by Ukrainian forces stoking fears of more attacks from Vladimir Putin’s army. And spikes in COVID-19 infections from the omicron XBB.1.5 subvariant are raising new concerns about responses as the Centers for Disease Control and Prevention reports that its prevalence has nearly doubled over the past week and represents about 41% of new cases in the U.S.