(Bloomberg) -- A monthly Bureau of Labor Statistics report due Friday is set to show the US unemployment rate edged higher in November as the economy began to slip into a recession, according to Bloomberg Economics.
Alongside a rise in the unemployment rate, to 4% from 3.9%, the figures will probably also reveal a temporary rebound in employment growth thanks to the resolution of two major strikes, Bloomberg economists Anna Wong and Stuart Paul said Thursday in a preview of the report.
“It’s harder for job seekers to find work, and longer stints of unemployment usually lead to persistent increases in the unemployment rate,” Wong and Paul said. “Our view is that a recession likely began in October.”
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Job creation has slowed this year as employment rates for key working-age demographics have returned to pre-pandemic levels, and wage growth has also cooled as inflation has receded.
The Bloomberg economists see the recent resolutions of the United Auto Workers and Screen Actors Guild-American Federation of Television and Radio Artists strikes boosting the headline job creation figure by 41,000 in the November report, bringing total job creation to 161,000.
Still, “hiring likely was concentrated in only two sectors: health care and government,” they said. “We expect to see flat to marginal gains in other sectors, with outright declines in manufacturing, financial activities, and professional and business services.”
The Federal Reserve’s interest-rate increase in July now appears to have been the final hike in a historically-rapid tightening cycle that began last year, and investors are increasingly betting that the central bank will begin cutting rates as soon as March, according to futures.
“The Fed can engineer a soft landing if it cuts rates soon,” Wong and Paul said. But waiting too long would mean “the labor market’s nonlinear negative feedback loop may have already kicked off, making a hard landing the most likely outcome.”
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