Employment Report (Nov.)

The disappointing 210,000 gain in non-farm payrolls in November suggests the labour market recovery was faltering even before the potential impact of the new Omicron variant, possibly due to the rising infection rates in the Northeast and Midwest. Nevertheless, the Fed is still likely to push ahead with plans to accelerate the pace of its QE taper at this month’s FOMC meeting.
Andrew Hunter Senior US Economist
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US Chart Book

Omicron impact short-lived

The surge in Omicron infections means more people were self-isolating in early-January than at any time since the beginning of the pandemic, although the impact that will have on employment and output remains uncertain. Furthermore, with cases now falling just as quickly as they rose, any effects will be quickly reversed in February. In contrast to earlier waves, the rise in infections hasn’t prompted as big a pullback in services activity, with fears of catching the virus lower than during previous waves. The far bigger factor this time is staff absenteeism, which we think will cause both payroll employment and manufacturing output to decline in January, although the impact should be mostly reversed by the end of the first quarter.

24 January 2022

US Economics Weekly

Omicron reaches plateau, leaving Fed free to hike

We expect the Fed to deliver some heavy hints at next week’s FOMC that it is planning an interest rate hike in March. With the Omicron wave now past its peak nationally, there is little to hold the Fed back, particularly if next week brings news of a further acceleration in wage growth.

21 January 2022

US Economic Outlook

Inflation to remain elevated as GDP growth slows

We expect underlying inflation to remain well above the 2% target this year, which means the Fed will push ahead with four rate hikes even though real GDP growth is likely to disappoint. Core inflation will average 4.3% in 2022 and close to 3.0% in 2023. GDP growth will slow to 2.7% this year and 2.0% in 2023.

20 January 2022

More from Andrew Hunter

US Data Response

ISM Manufacturing Index (Nov.)

The November ISM manufacturing survey suggests that supply shortages are yet to ease significantly, but it does at least echo anecdotal reports that they are no longer getting worse.

1 December 2021

US Employment Report Preview

Slowdown ahead

We expect non-farm payrolls to have risen by a solid 500,000 in November, but the growing risk of a winter COVID wave and a dwindling supply of available workers look set to weigh on employment growth soon.

24 November 2021

US Economics Update

Build Back Better to have limited near-term benefits

The Build Back Better Act, which was passed by the House today, would provide only a small boost to economic growth next year. With the economy already running up against capacity constraints and any supply-side benefits of the plan likely to take time to feed through, there is a risk that it exacerbates rather than eases the economy’s near-term inflation problems.

19 November 2021
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