Here's what 5 Wall Street strategists are saying about November's weak jobs report

  • November’s jobs report showed signs of a slowing labour market as the US added 245,000 nonfarm payrolls, which lagged the consensus estimate of 460,000. The unemployment rate fell to 6.7% from 6.9% and met forecasts.
  • Several Wall Street economists have pointed out that the unemployment rate fell for the “wrong reasons,” and reflects a drop in the labour force participation rate rather than an increase in household employment.
  • Many also see these numbers as an indication that the next round of stimulus is urgently needed.
  • From Goldman’s chief economist to BlackRock’s bond chief, here’s what Wall Street is saying about November’s jobs report.
  • Visit Business Insider’s homepage for more stories .

The US added 245,000 nonfarm payrolls in November, missing the consensus expectation of 460,000 additions in a largely worse-than-expected jobs report.

One bright spot was that the US unemployment rate fell to 6.7% from 6.9%, although several economists have pointed out that’s not necessarily a sign of a healthy labour-market recovery.

From Goldman’s chief economist to BlackRock’s bond chief, here’s what Wall Street is saying about November’s jobs report:

Jan Hatzius, Goldman Sachs chief economist

“It’s largely what you see is what you get. We are seeing a slowdown in the sectors of the economy that are most virus-sensitive like retail, like restaurants, so I think it’s confirming that the economy has been slowing sharply in the fourth quarter and we’re probably still in that process,”Hatzius told CNBC.

“I think the news on the labour market has generally been good. Not in this report, but if we look in 2020 since the economy bottomed and the restrictions started to ease in April/May generally it’s been better than expected.

“We’ve also seen less evidence for scarring effects in the labour market than a lot of people were concerned about, but there’s still some risk of scarring…and if I were a policymaker on the fiscal or monetary side I would be urging that more support is needed in order to minimise those risks.”

Aneta Markowska, Jefferies chief financial economist

“Today’s data underscore the urgent need for additional policy support. Fiscal authorities are clearly better equipped to offer relief, and recent developments are encouraging. If Congress fails to deliver next week, we would expect the Fed to step in. Either way, help is on the way,” Markowska’s team said in a note to clients.

“The unemployment rate fell by 0.2% to 6.7%, but it did so for the wrong reasons. 400k individuals dropped out of the labour force in November, apparently seeing no prospect of finding a job in the midst of a pandemic.

“With no changes in labour force participation, the unemployment rate would have remained at 6.9%. We believe that the 6.7% unemployment rate grossly overstates the extent of improvement in the labour market.”

Rick Rieder, BlackRock CIO of global fixed income and head of the global allocation team

“It’s not surprising to see a one month pause in the rapid pace of payroll gains we have seen, with slower hiring due to temporary Covid-related reductions in activity, even if the actions fall short of the dramatic springtime lockdowns,” Rieder said in a note to clients.

“Still, there are positive signs that the labour market should continue to recover decently in the year ahead, and in fact there’s some evidence that services employment is already looking “stretched” in some areas, with weekly hours rising impressively in recent months; a strong sign that demand is there and that payroll employment will likely follow.

“One thing to keep in mind as we head into 2021, however, is that next year’s rate of economic growth may well outpace the labour market recovery, as this year’s monetary and fiscal stimulus, as well as likely stimulus in the coming months, has gone a long way toward protecting both businesses and household income from much more dire outcomes.”

Joseph Song, Bank of America senior US economist

“The rise in long term unemployed is a key issue heading into year end,” said a team of economists led by Joseph Song.

“The number of long-term unemployed workers continue to climb as workers unemployed for 27 weeks or longer increased to 3.9mn from 3.6mn in November, making up about 37% of the total unemployed…Many of these long-term unemployed workers will exhaust their unemployment insurance benefits in coming weeks unless there is another round of stimulus passed by Congress.”

James McDonald, Hercules Investments CEO and chief investment officer

“For now, the job market recovery is over until the winter wave of COVID-19 is behind us. Vaccine deployment will not happen in time to prevent layoffs both from small businesses and major multinational companies,” McDonald said in an email.

“Whether or not we see a double-dip recession in the U.S. depends on the interplay between the severity of the shutdowns and their impact on the economy over the winter and the size of potential stimulus from Congress and the Federal Reserve.”

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