Musings on the November Jobs Report

MacroStrategy | Michael Darda, Chief Economist & Market Strategist | Dec. 5, 2014 (Read Report)

The November non-farm payroll report was a blowout (up 321K versus a consensus expectation of 230K with 44K of upward revisions). Even wage growth seemed to spring to life with hourly wage rates rising 0.4% m/m. Hours worked rose 0.6% m/m. The combination of the two suggests that income growth is either accelerating or will be materially revised upward. Even so, the unemployment rate remained flat at 5.8% due to a weak household survey report (up only 4K versus 683K in October). Nonetheless, the U6 rate of underemployment edged down 0.1 percentage point to a new cycle low of 11.4%. The prime age employment ratio (those 25 to 54) that bears a strong forward correlation to hourly wage growth remained flat at 76.9%, still about 300 bps from its pre-crisis/Great Recession level. (Read more)