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Concerns about a stock market crash are emerging ahead of Friday's crucial jobs report. In fact, tomorrow's jobs report should confirm whether the country is indeed on track for the Fed's much-talked-about soft landing. It should also offer an idea of โโwhat to expect in the new year.
So what do you need to know this time?
Well, the final jobs report for 2023 is due out Friday morning and economists predict the U.S. economy added 160,000 non-agricultural payrolls in December. This would put the country on track to create an average of 232,000 jobs per month through November, which is 2.78 million jobs for the year.
This is actually notably below the 4.79 million jobs added in 2022, one of the strongest years in terms of employment since the metric was first recorded. In fact, unemployment fell to 3.4% in January of last year, the lowest level since 1969 according to cnn.
While the unemployment rate has since risen in the months since, it has remained surprisingly strong, especially given once-widespread predictions of a recession on the way. If you remember, the unemployment rate hit 3.7% in November with 199,000 jobs added.
That's despite hundreds of thousands of workers who went on strike last year.
Fears of a stock market crash are in full swing as strong employment pushes back rate cuts
Interestingly, Wall Street may be disappointed by the strength of employment on Friday. In fact, if the labor market proves too tight by December, it will likely prompt the Federal Reserve to delay its rate cuts this year. This would be negative for the stock market.
Unfortunately, it looks increasingly likely that employment will rebound strongly on Friday. Today, ADP released private payrolls data showing jobs rose by 164,000 in December, a big jump from November's level of 101,000 and better than projections of 125,000.
โWe are returning to a labor market that is very much aligned with pre-pandemic hiring,โ said Nela Richardson, chief economist at ADP.
This has set the stage for a possible jobs defeat on Friday. In fact, economists predict that the unemployment rate will be 3.8% in December. While this could further undermine any recession prediction, it would likely end some speculation that the central bank could cut rates as early as March.
"When it comes to trying to resolve the argument over whether or not the economy is headed for recession next year, there couldn't be more important economic news on the planet other than the payroll jobs report," said the FwdBonds economist. ,Christopher. Rupkey said cnn last week. "We haven't had a recession without job losses, so we will be watching to see whether the labor market has lost momentum or not."
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com. Publication Guidelines.
