What to Watch for From Today’s Jobs Data, Unemployment Rate and More
The outcome could reshape Fed rate-cut expectations for 2026.
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Today begins the data deluge we referred to in Friday’s Weekly Roundup, and we'll see what the collected data say about the pace of job creation in October and November compared to the prior months.
The market expects 50,000 jobs were added in November, down from 119,000 in September. Because of the government shutdown, there is no consensus figure for October job creation, and that initial figure will be shared inside today’s report for November. Given what we saw in ADP’s monthly figures through November and the employment index levels from ISM as well, we would be surprised to see a sharp increase in job creation during October and November.
Between those updated figures and the refreshed Unemployment Rate, we and the market will be looking to see if the numbers call for the Fed to do something more than the single 25-basis point rate cut telegraphed in last week’s updated set of economic projections.
While those refreshed Fed figures do not call for any specific jobs figures, they show the Fed sees the Unemployment Rate hitting 4.5% at the end of this year and dipping to 4.4% next year. This means that if we see a November Unemployment Rate figure that is higher than the market consensus of 4.4%, the same as it was in September, we are likely to see rate-cut expectations increase and the Fed coming around to the market’s view that more than one rate cut is needed next year.
With this in mind, as we dig into today’s jobs data out at 8:30 AM ET, we will also want to watch the CME FedWatch Tool, which currently sees the next Fed rate cut in April. What we’ll be looking to see is if the combined jobs figures for October and November and the November Employment Rate are enough to pull forward that expected cut to the Fed’s January meeting.
If that is the outcome, it could serve as a potential kick-start for the year-end rally that many have been hoping for. Let’s remember, though, that we will be getting a few pieces of October and November inflation data later this week, and we could very well see the market return to trading day to day based on the latest piece of data.
At 9:15 AM ET, S&P Global will publish its Flash Manufacturing and Services PMI for December, which is about a week or so earlier than usual. We can chalk that up to the Christmas holiday next week, and it means the survey period will be a tad shorter. As such, we’ll be mindful of what it presents, keeping its shortcomings in mind, but still interested in what it says about job creation and inflation pressures.
While it may not be appetizing, the reality is that what we would normally consider "bad" jobs data would be positive for the market, especially if the inflation data remain little changed or improve. Normally, we would look to see what Fed speakers would say once all of the data from this week is in hand, but we’ll have to make do with the three that are speaking tomorrow.
