Friday’s jobs report painted a mixed picture, with some bright spots in November's labor data. Nonfarm payrolls surpassed expectations, adding 227,000 jobs compared to the market’s estimate of 202,000. The October data was revised upward, though the adjustment was less significant than many had hoped, as weather conditions and labor disputes skewed the figures. Some analysts may interpret November's strong numbers as an indication that October's weaker performance was an outlier.

However, the unemployment rate ticked up to 4.2%, aligning with market expectations but reflecting an increase from the previous month. This rise could become a critical factor for the Federal Reserve as it weighs a potential rate cut in December. Cracks are beginning to appear in certain areas of the labor market, fueling concerns at the Fed about cutting rates too late—an error that has occurred in past cycles.

On a brighter note, Average Hourly Earnings, a key inflation gauge, grew by 0.4% month-over-month, equating to an annualized rate of approximately 4.8%. While this pace of wage growth might raise inflationary concerns, it remains a net positive for consumers as long as wages outpace inflation. The bigger question revolves around the persistence of inflation, with upcoming data likely to provide critical insights.

The Bureau of Labor Statistics (BLS) will release the monthly Consumer Price Index (CPI) report on Wednesday, offering fresh clues about inflation. Markets expect headline CPI, which includes housing, energy, and food prices, to rise by 0.2% month-over-month. Core CPI—excluding volatile items like food and energy and serving as a closer proxy to the Fed's preferred Core PCE measure—is projected to increase by 0.3%, a level still considered elevated.

Signs of weakening inflation could boost the odds of a January rate cut, while persistent inflation may prompt caution among Federal Reserve policymakers. As the economy navigates these mixed signals, both labor and inflation data will play pivotal roles in shaping the Fed’s decisions in the weeks ahead.

Tune in live from 8 a.m. to 5 p.m. ET, or anytime, anywhere, on‑demand.

Or stream it via thinkorswim® and thinkorswim Mobile, available through our broker-dealer affiliate, Charles Schwab & Co., Inc

Please do not reply to this email. Replies are not delivered to Schwab Network. For inquiries or comments, please email [email protected].

See how your information is protected with our privacy statement. 

Charles Schwab and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions. Schwab Network is brought to you by Charles Schwab Media Productions Company (“CSMPC”). CSMPC is a wholly owned subsidiary of The Charles Schwab Corporation and is not a financial advisor, registered investment advisor, broker-dealer, or futures commission merchant.