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Wage Growth in Question: November Jobs Report Preview

November jobs report wage unemployment

The November Employment report published by the ADP showed stable job growth across all segments of the private sector, continuing the recent trend of a tightening labor market.

Analysts are calling for an additional 190,000 to 250,000 nonfarm positions with the unemployment rate currently at 3.7%. Once again, there is the expectation for moderate but not significant wage growth. With Fed chair Powell’s recent comments that interest rates were nearing a ‘neutral level,’ the wage growth number remains key.

Since wage growth is generally viewed as an indicator for inflation, it will be interesting to see how the market views this value. On one hand, a large growth rate may lead traders to believe the Fed could slow or stop their rate hikes further fueling this extended bull run. Conversely, a low or normal wage growth number will likely lead to further hikes from the Fed something bullish investors will not want to see.

This is, at best, a discussion on what “could be” if traders really pay attention to the details of this report. Realistically, any surprising value from this single report will likely be soon forgotten given the multitude of factors at play in this market. Most obvious is the looming trade war that, although temporarily put on hold following ongoing talks between the US and China, continues to impact the recent market sell off.

Employment reports are sometimes market movers but, given the current market climate, it would take a major surprise to have any real impact. That being said, a fragile market can move several points very quickly on little information. Now more than ever it is important for traders to be prepared for times of extreme volatility.

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