Jobs Report Headlines Active Week of Economic Data

The final Federal Reserve meeting of the year is in two weeks and investors are still unsure whether the U.S. central bank will cut interest rates again.

Currently, the pricing of federal funds futures suggests that there is a 67% chance that the Fed goes ahead and cuts by 25 basis points, while there’s a 33% chance that it stands pat with rates at 4.5% to 4.75%.

As always, the economic data could shift the odds over the next couple of weeks with central bankers more likely to cut rates if inflationary pressures remain mild but keep rates at their current level if they sharpen. In that regard, this week offers several data points that could sway the Fed one way or the other. 

Today, the Institute for Supply Management is expected to report that its manufacturing index edged up from 46.5 to 47.6 during November.

On Wednesday, the ISM will release its services index. That gauge is anticipated to have fallen from 56 to 55.5.

For both the manufacturing index and services index, readings above 50 indicate the sort of growth that foreshadows an uptick in inflation, while readings below 50 indicate contraction.

Also on Wednesday, the U.S. Census Bureau will release data on factory orders for October. Expectations are that orders bumped up 0.3% after declining 0.5% in the previous month.

That will be followed by initial jobless claims on Thursday and then the biggest piece of economic data of the week on Friday—the nonfarm payrolls report.

A 200K Bump in Jobs Report?

Economists expect that employers added 200,000 jobs during the month of November, up from 12,000 in October.

You’ll recall that October’s figure was distorted by hurricanes and a strike at Boeing. 

The Bureau of Labor statistics is also expected to report that the unemployment rate ticked up from 4.1% to 4.2% during the month. 

If this week’s economic data—particularly the jobs numbers—deviate significantly from expectations, Fed rate probabilities are likely to move in turn.