February 4, 2023

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E24 - More new jobs were created than expected in the USA

E24 – More new jobs were created than expected in the USA

In November, 263,000 new jobs were created in the United States outside of agriculture. This is 63,000 more than analysts expected. – Concern for the Federal Reserve, says the chief economist.

The face of the job sends Wall Street’s pre-contracts down just under an hour before the regular trading open.
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US authorities have spoken: 263,000 new non-agricultural jobs were created in the US in November.

In advance, analysts predicted that 200 thousand new jobs will be created.

Kjersti Haugland, chief economist at DNB Markets, believes that a strong labor market and wage growth could create problems for the US central bank’s (Fed) long-term inflation target.

– From the Fed’s point of view, the numbers are worrisome because the fear is that inflation will remain at a level above the 2 percent target, says Hoagland.

Wage growth was expected to decline upfront, but has picked up steam and is now more than 5 percent.

These are numbers that may indicate that the interest rate peak may be higher than previously thought, explains the chief economist.

Few signs of calming down

On December 14, Central Bank Governor Jerome Powell and the Federal Reserve made their final interest rate announcement for the year. Then the Fed is expected to break the three-way rate hike trend, and raise the interest rate by 0.5 percentage points.

Hoagland indicates that the central bank will likely not change its rate decision at the December meeting on the basis of this, but does suggest that the Fed will be more cautious about ending monetary policy tightening.

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There are few signs of a cooling in the job market, says Haugland.

A month ago, it was expected that 193 thousand new jobs would appear, and the result was 261 thousand jobs. Also in September, more jobs were created than analysts expected.

The jobs numbers are often referred to as the “most important numbers of the month,” because they describe activity in the world’s largest economy.

The flip sends Wall Street’s precontracts down just under an hour before the regular trading open. It happens after the tip of the stock exchange on Wednesday after Federal Reserve Chairman Jerome Powell indicated that there could be a smaller jump in interest rates actually at the meeting in December.

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Price growth remains high in the US

It was interpreted as bad news

The fact that more than 100,000 new jobs are being created every month, as well as more jobs than analysts could predict up front, is interpreted these days as bad news.

The reason is that unemployment in the United States is already relatively low, and when a good momentum in the economy leads to more jobs, employers have to fight harder to secure employment. Employment in which there is less, because the number of unemployed is less.

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This puts pressure on wages, which in turn can help push up prices.

Therefore, the US central bank, the Federal Reserve, always takes these job numbers into account when setting interest rates.

What the central bank seeks is to keep price inflation, or core inflation that subtracts food and energy prices, at around 2 percent.

New figures from Thursday showed that this was 5 per cent lower in October compared to the same month last year.

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The chief economist said in Powell’s speech: – The period of raising interest rates three times is over

Just a few days before the new jobs numbers were put on the table, Central Bank Governor Jerome Powell nonetheless signaled the possibility of lower interest rate hikes in the future.

– The time to moderate the pace of interest rate increases may come as early as the December meeting, the central bank governor said in a speech on Wednesday.

The last four times the central bank raised the interest rate by 0.75 percentage point. But in December, the Fed is expected to raise interest rates by 0.5 percentage points.