Strong November Jobs Report Could Signal Slower Interest Rate Cuts Ahead, Experts Say

The November jobs report released Friday showed nonfarm payrolls surged by 227,000, a significant jump from October's weather and Boeing strike-related disruptions. Experts are weighing in on what the report could mean for interest rates in the future. 

Expert Ideas: 

Glen Smith, chief investment officer of GDS Wealth Management, said Friday's stronger-than-expected jobs report helps to quell fears that the labor market was softening following October's report. Smith sees the Fed as likely to cut interest rates in December, but takes the Fed at its word in telegraphing a more patient stance on rates for 2025.

Read Next: UnitedHealthcare CEO Brian Thompson Fatally Shot Outside NYC Hotel

Jane Oates, former Assistant Labor Secretary under the Obama administration and current senior policy advisor at WorkingNation, noted that nearly half of the job growth was contributed by healthcare, leisure and hospitality with manufacturing also showing a positive rebound following the resolution of the Boeing strike.  

However, Oates pointed to the numbers showing nearly a million fewer open jobs than this time last year and the labor force participation rate remaining stagnant as signs that the economy may be cooling. 

Chris Zaccarelli, chief investment officer of Northlight Asset Management said the Federal Reserve is likely to note an overall slowing in the job market despite November’s strong headline number and should cut rates by 25 basis points at its next meeting.?

"Given the positive backdrop of strong economic growth, a healthy labor market, and inflation that is relatively contained, the Fed can keep cutting rates and that should allow the bull market to run into the end of the year and into early next year," Zaccarelli said. 

Bill Adams, chief economist for Comerica Bank, highlighted the unemployment rate as noticeably higher than a year or two ago and said job growth isn't keeping up with growth in the labor force. Adams also said that despite a higher level of unemployment, wage growth continues to run hotter than pre-pandemic.

He sees the Fed as likely to cut the federal funds target a quarter percent at this month's decision, and echoed other experts in saying they will likely slow the pace of rate cuts in 2025.

"After the December decision, the Fed is likely to switch to a quarterly pace of cuts, with subsequent cuts in March and June ? the Fed could pause rate cuts in the second half of 2025 and wait and see how those policies affect the job market and inflation," Adams said. 

Read Next: 

• Art Cashin’s Lessons: Cuban Crisis Trades To Timeless Wall Street Wit

Image created using artificial intelligence via Midjourney.