Ahead of the next US official employment report, due next week, analysts at Wells Fargo, look for job growth to moderate further in November and the subsequent month. They point out that wage data will also be crucial for the Federal Reserve. 

Key Quotes: 

“Nonfarm payrolls rose 261K in October, topping expectations again. Yet beneath the surface, there were some signs in the data that cracks are emerging in the labor market. Technical factors related to the birth-death model appear to be flattering the headline nonfarm payroll numbers. Employment, as measured by the household survey, fell by 328K in October, and the labor force participation rate again tumbled back to where it was when the year began.”

“We look for job growth to moderate further in November and the subsequent months. Layoffs, according to initial jobless claims and the JOLTS report, remain low, but discharges are only half the net hiring equation. Demand for additional workers appears to be slipping. Job openings, hiring plans, PMI employment sub-components and consumers' views of the labor market have all deteriorated since the spring. Beyond the headline, the average hourly earnings data also will be crucial for Federal Reserve policymakers. It will take more than normalizing supply chains to return inflation to 2%, and slower wage growth is another important piece of the puzzle.”