US: Jobs numbers supports consumer and FOMC December move - Wells Fargo

According to analysts from Wells Fargo, the increase by 178K in November’s NFP and the 3-month moving average at 176K, provides a solid support for a December rate hike from the Federal Reserve. 

Key Quotes: 

“Nonfarm payrolls rose 178,000 in November. Job growth has averaged 176,000 over the past three months, with private sector payrolls up an average of 165,000 amid strength in the service sector, especially professional & business services. These gains are consistent with solid consumer spending and continued economic growth. Aggregate hours worked are up a healthy 2.7 percent annualized over the past three months.”

“Average hourly earnings disappointed in November, declining 0.1 percent. Earnings are still up 2.5 percent over the past year and add to the evidence of a tightening labor market. Wage gains remain widespread across industries. Over the past year, wage gains of 2.5 percent exceeded the rise in the Consumer Price Index of 1.6 percent, thereby resulting in real wage gains and providing support for improved consumer spending.”

“Rising labor compensation in the face of small gains in labor productivity gives rise to higher unit labor costs and profit pressures in an aging business cycle. A tighter labor market should prompt a continued strengthening in wage growth now that we are in the range of full employment, and this is what we have witnessed over the past year.”