For once, the upcoming jobs report may not be the most critical of all time.
Federal Reserve officials have signaled that an interest-rate increase is in play for their December meeting, with both markets and economists now anticipating that normalization will begin less than two weeks from now. That means the payrolls data will probably offer more information about the pace of tightening in the months ahead than on the timing of the first hike.
“It would have to be a very large surprise — both in November and potentially a downward revision to October — to really change the outlook enough for the Fed to stop and reconsider the hike in December,” said Laura Rosner, a U.S. economist at BNP Paribas in New York.
Payrolls probably climbed by about 200,000 last month following a 271,000 surge in October that was the biggest this year, according to the median forecast of a Bloomberg survey of economists. The unemployment rate is expected to hold at a seven-year low of 5 percent,.
While some slowdown from October is to be expected, economists are looking for confirmation that hiring remains solid after payroll gains decelerated sharply in August and September. Friday’s data will do a lot to clarify which trend prevails.
Payrolls growth would have to be severely disappointing — closer to 100,000 or less — for it to prevent the Fed from hiking, said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina.
The signal from policy makers regarding an increase this month has been so clear that “to not do it would risk adding uncertainty to financial markets right at year-end,” he said. “That might do more harm to the economy than raising interest rates would.”