The US economy positively surprised in November by creating 227,000 jobs, surpassing the expectation of 200,000.
This figure not only reflects a remarkable recovery following the 36,000 jobs upwardly revised in October, affected by strikes and natural phenomena, but also confirms the resilience of the labor market.
However, the unemployment rate slightly increased to 4.2%, indicating a rise in the number of people unsuccessfully seeking jobs.
By sector, healthcare, leisure, hospitality, and manufacturing led the hiring, while retail trade experienced its largest loss in a year, with a drop of 28,000 jobs. This relatively mixed structure raises questions about structural pressures in certain sectors.
The market reacted with significant movements, primarily in the fixed income front. Treasury yields fell following an increase in the implied probability of a Federal Reserve rate cut at its December 17-18 meeting, which rose from 70% to 85%. This adjustment in expectations generated initial pressure on the US dollar, which has relatively supported LATAM FX, most of which is poised to close the week on a positive note, partly benefiting from external pressure relief.
The prospect of a rate cut, which would reduce the target range to 4.25%-4.5%, remains a topic of debate among Fed members. Recently, Jerome Powell emphasized the strength of the economy as a margin to act cautiously, while Christopher Waller expressed support for further cuts, considering inflationary challenges.
At the macroeconomic level, the November report reaffirms the strength of the US labour market, although the rise in unemployment and the drop in labor force participation, now at 62.5%, raise doubts about its potential dynamism. This balance will be crucial for monetary policy decisions, with the Fed still facing the complex task of avoiding adverse impacts on employment without reigniting inflationary pressures
