U.S. labour market continued its strong performance as there was an addition of 211,000 new jobs during November, while the U.S. stock market reacted to the jobs report positively .The data released by the Department of Labour showed that even though the Nonfarm Payrolls (NFP) data were not as strong as the previous month, they exceeded forecasts performed by analysts who were expecting the number to be closer to 200,000. The Department of Labour also released revised figures for September and October NFP data with additions of 35,000 to what was initially reported. In addition to that, the average hourly earnings for November increased by 0.2% to $25.25 in comparison to a 0.4% increase during the previous month.
The Department of Labour also conducted a separate household survey which showed that the unemployment rate for November remained at 5%, its lowest level of the last seven years.The decrease of unemployment was led by new positions within the construction, food services, and retail sectors, while the mining and manufacturing sectors only moved with small increases. Friday’s NFP report was yet another indication of the U.S. economy’s strong and positive momentum. And it might just be the final set of data to clear the way for an interest rate increase later this month for the first time in in almost a decade.
The U.S. stock markets were boosted by the strong NFP data on Friday as the Dow Jones Industrial Average on Friday moved with gains by 1.8% to 17,815. The S&P 500 also increased by 1.7% to 2,088.01, while the Nasdaq Index posted marginal losses and ended last week’s trading at 4,712.26.
Prior to the release of the NFP data, there was an already positive mood concerning the likelihood of an interest rate increase before the end of the year. Federal Reserve (Fed) Chairwoman Janet Yellen gave a speech before the Congress on Thursday to give an update of the current economic situation, where she said that the economy is reaching a point where it can handle an interest rate rise. In what could be the intentions of the Fed during its next meeting, she said that a rate hike would mirror the economy’s high level of positive performance after the financial crisis. Ms Yellen said that the U.S. economy was negatively affected by a slowdown of the global economy and a stronger dollar, but pointed that consumer spending and strong housing sector remained robust.
There is now an increasing number of investors who believe that the Fed might proceed with an interest rate increase during its next meeting on 15 December.
During this week, there are upcoming monetary policy decisions by the Reserve Bank of New Zealand (RBNZ), due on Wednesday 09 December at 20:00 GMT, and Bank of England (BOE) on Thursday 10 December at 12:00 GMT. Are the markets due for increased volatility, or is everyone holding back for the Fed decision?