Analyst Uruci argues that the Federal Reserve's growing concern over labor market weakness is overstated, pointing to recent employment figures that suggest sustained hiring momentum across key sectors.
- November nonfarm payroll increase of 215,000 jobs, above the 180,000 forecast
- Unemployment rate unchanged at 4.1% with labor force participation rising to 62.8%
- Average hourly earnings up 3.8% year-over-year
- Atlanta Fed GDPNow model revised upward to 2.9% for Q4 2025
- CME FedWatch now shows 60% chance of a March 2026 rate cut, down from 75%
- 10-year Treasury yield increased to 4.32% following revised economic outlook
Recent labor market indicators indicate stronger-than-expected job creation, undermining the Federal Reserve’s recent caution about economic softness. Uruci highlights a November nonfarm payroll increase of 215,000 jobs, significantly exceeding the consensus forecast of 180,000. This marks the fifth consecutive month with job gains above 200,000, signaling resilience despite elevated interest rates. The unemployment rate held steady at 4.1% in November, while the labor force participation rate rose to 62.8%, reflecting broader re-engagement in the workforce. Uruci notes that the average hourly earnings growth of 3.8% year-over-year remains consistent with underlying wage pressure, which the Fed has cited as a driver of persistent inflation. These figures suggest that the labor market is not showing the deterioration the Fed has implied in recent policy statements. Uruci points out that the Atlanta Fed's GDPNow model, which incorporates real-time labor data, now forecasts fourth-quarter GDP growth at 2.9%, up from 2.3% in early November. This upward revision implies that labor strength is supporting broader economic momentum. Market participants are reassessing rate-cut expectations. The CME FedWatch Tool now prices in a 60% probability of a rate cut in March 2026, down from 75% a month earlier. Investors in the 10-year Treasury yield have adjusted, pushing yields to 4.32%—a 10-basis-point increase from December 1. The Federal Reserve's next policy meeting is scheduled for January 28–29, 2026. Uruci’s analysis suggests that if employment data continues to trend positively, the central bank may delay rate cuts longer than anticipated, favoring a data-dependent stance.