An important jobs report is set to be released on Friday, and here's what you can anticipate.

• The BLS is predicted to reveal on Friday that nonfarm payrolls rose by 214,000 in November, marking a substantial improvement from the modest 12,000 increase seen in October.
• The Federal Reserve will have its final comprehensive look before its next policy meeting on December 17-18.
• Policymakers are now looking to recalibrate policy, and it is crucial for the Fed to obtain a clear picture of the situation, particularly with regards to inflation rates and the labor market.

The jobs report due out Friday could provide a clearer picture of the labor market's direction after a month of muted hiring due to storms and strikes.

On Friday at 8:30 a.m. ET, the Bureau of Labor Statistics is predicted to reveal that nonfarm payrolls grew by 214,000 in November, marking a substantial improvement from the previous month's meager 12,000 increase. This month's figure was the weakest for job growth since December 2020.

The report will be crucial as it will be the last comprehensive review the Federal Reserve will conduct before its next policy meeting on December 17-18. While markets anticipate the Fed to approve another quarter-point interest rate cut, this decision may alter based on the jobs count's outcome.

According to Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research, the number should be relatively healthy because it is expected to recover from the impact of Hurricane Milton and the Boeing strike, which negatively affected jobs in October.

The October number could be revised higher after BLS surveyors recheck the month's data.

The economic data could complicate the Fed's job and make the next few months challenging.

"Jones stated that he anticipates the figure to exceed 200,000, and the risk would likely be on the positive side if there is a significant rebound. However, he is uncertain if the jobs report will provide a clear picture of the future due to the impact of weather effects."

Important for the Fed

Policymakers need a clear picture of the Fed now to recalibrate policy as annual inflation rates rise and the focus is on the labor market.

Since April, the jobs market has been experiencing a mostly slower trend, with payroll gains averaging around 128,000 new jobs per month. As a result, the unemployment rate has risen to 4.1%. In response, Fed policymakers are considering lowering their benchmark short-term borrowing rate to a more neutral level, as they weigh the importance of both inflation and employment.

According to BNY economist Vincent Reinhart, a former Fed official who served 24 years at the central bank, the upcoming period will be extremely noisy due to the confluence of a storm and strike disruption affecting two months' worth of data, specifically the months when people are not working and the following month when they return to work.

"According to the Fed, the slowing of nonfarm payrolls in 2024 was a positive trend, with a monthly job creation rate of around 100,000 jobs, which was not concerning."

Recent signals indicate that the job market is stabilizing, but not deteriorating.

State of the labor market

The number of initial weekly unemployment insurance claims has remained relatively stable at around 220,000, despite a slight increase in continuing claims in early November. This suggests that companies are not massively laying off workers but also not rehiring those who lose their jobs.

The Fed's "Beige Book" report on Wednesday stated that hiring was "subdued" due to low worker turnover and few firms increasing their headcount. However, the report noted that layoffs were "low," but employers expressed caution about the future pace of hiring, with more enthusiasm about entry-level workers and skilled trades.

According to BLS data this week, the number of job openings rose in October, but the hiring rate decreased, and the number of people leaving their jobs voluntarily also increased.

The Fed will need to consider various factors, including inflation concerns, when making its rate decision and issuing its future outlook.

If the labor market remains stable, it will not contribute to inflation, according to Reinhart.

As the labor force sees re-entrants from October, the unemployment rate is predicted to increase to 4.2%, while average hourly earnings are expected to rise 0.3% on the month and 3.9% from a year ago, both slightly lower than the previous month.