The Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation report at 8:30 est this morning, as usual.
The results were good. 178,000 net new positions were filled during the month, which is right at the average monthly gain so far this year. Net revisions were slightly negative, subtracting -2000 positions from prior months’ employment estimates. The BLS also said wages made no upward progress during November, after having jumped a lot the month before.
The only out-of-the-ordinary figure was the unemployment rate, which fell to 4.6% from 4.9% in October. We’ll likely find next month that the November figure comes from transitory statistical strangeness that will have already disappeared.
What to make of this ES?
Nothing, really. In fact, I think that as stock market investors, we should no longer be monitoring the ES for signs of potential labor market weakness. Instead, we should be on the lookout for indications of surprising strength, possibly in the number of new hires, but more likely in the rate of wage gains.
That’s because I think we’re well past the point where we’ve got to guard against economic weakness. Instead, we’ve got to be alert for signs of the more likely threat–that the pace of interest rate rises will accelerate from the currently anticipated once-in-a-long-while pace..
The first step in adopting this new mindset, I think, is to consider what the endpoint for increases in the Fed Funds rate–and the resulting terminal interest rate point for 10-year Treasuries, which is the closer substitute for stocks in long-term investors’ portfolios–will be.
More on this topic on Monday.