Weekly Market Outlook: U.S. November Nonfarm Payrolls and Powell's Latest Speech

Insights – This week, the market is set to focus on the U.S. November nonfarm payroll report. Many indicators suggest that the U.S. economy continues to outperform other nations, and President Trump’s policy agenda could reignite inflationary pressures, potentially reducing the likelihood of further rate cuts by the Federal Reserve. Additionally, the U.S. will release the November ISM Manufacturing Indexes this week. Last month, the ISM Manufacturing PMI fell to 46.5 in October, marking its lowest level since July 2023 and falling short of the expected 47.6, with the prior reading at 47.2 in September. Fed Chair Powell is also scheduled to speak this week, with markets eagerly awaiting any signals on monetary policy. Meanwhile, global PMI data will start rolling out on Monday, as manufacturers worldwide navigate a rapidly changing business environment, particularly under the looming threat of U.S. tariffs.

Last week, the Fed's preferred inflation gauge rebounded last week, with the U.S. Core PCE Price Index rising 2.8% year-on-year in October. This data supports the Fed's cautious stance on further rate cuts. Meanwhile, Bank of Japan Governor Kazuo Ueda stated that with inflation and economic trends aligning with the central bank’s forecasts, a rate hike is "within sight," which helped strengthen the yen, though he did not explicitly commit to a December hike. In the Eurozone, November's Harmonized CPI rose to 2.3% year-on-year, exceeding the ECB’s target, increasing market expectations for a 25-basis-point rate cut in December. ECB Governing Council member and Bank of Greece Governor Yannis Stournaras noted that if evidence emerges that U.S. tariffs could push Europe into a recession, the ECB would likely adopt a more aggressive easing policy.

1. U.S. November Nonfarm Payroll 

The U.S. Bureau of Labor Statistics (BLS) will release the November nonfarm payroll report on Friday (Dec. 6). Ahead of this, JOLTS is set to be released on Tuesday (Dec. 3), followed by the ADP Employment Report on Wednesday (Dec. 4). Weekly initial jobless claims will also be published on Thursday (Dec. 5).  

In October, nonfarm payrolls shocked markets with an increase of just 12,000 jobs, the lowest since 2020 and far below the expected 100,000. According to a median survey of economists, November nonfarm payrolls are projected to rebound significantly, with an expected increase of 195,000 jobs. However, a potential downside risk is the unemployment rate, which may rise to 4.2% from 4.1% in October.  

Some Wall Street analysts attribute October's weak data to disruptions caused by two hurricanes and the Boeing strike, though concerns remain that the labor market may be deteriorating. As such, whether November’s data will be closely watched on Friday.

2. Fed Officials' Speeches, with Powell in the Spotlight

Over a dozen Fed officials will speak this week, including Chair Jerome Powell at the DealBook Summit (Thursday, 2:45 a.m. Beijing time). Powell’s comments will be closely watched for insights on the rate cut outlook for December and 2024.

Deutsche Bank’s Chief U.S. Economist Matthew Luzzetti expects one more rate cut in December, followed by a pause through 2025 to monitor inflation progress. He noted that the urgency for rate cuts is much lower and that it makes sense to slow the pace of cuts earlier than anticipated.

3. U.S. November ISM Manufacturing

The ISM Manufacturing Index (Monday, Dec. 2) and Non-Manufacturing Index (Wednesday, Dec. 4) will provide key insights into U.S. economic activity.

In October, the ISM Manufacturing PMI fell to 46.5, its lowest since July 2023, while the Services PMI unexpectedly dropped to 51.8. Despite manufacturing weakness, the services sector has supported overall economic growth, with GDP continuing to grow at over 2% annually.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that the U.S. services sector remained strong in October, offsetting manufacturing weakness and supporting economic growth. He added that the recent strength in services has helped the U.S. economy outperform other major developed nations, with GDP likely to continue growing at an annualized rate of over 2%.

Key Economic Data

Monday: U.S. November ISM Manufacturing PMI  

Wednesday: U.S. November ADP Employment Report, U.S. November ISM Non-Manufacturing PMI  

Friday: U.S. November Nonfarm Payrolls  

Key Economic Events:

Tuesday: FOMC Permanent Voting Member and New York Fed President John Williams speech, Fed Governor Christopher Waller speech  

Wednesday: ECB President Christine Lagarde speech, 2025 FOMC Voter and St. Louis Fed President James Bullard speech, Fed Governor Philip Jefferson speech  

Thursday: Fed Chair Jerome Powell speech, Fed Beige Book release  

Key U.S. Earnings:

Tuesday: Salesforce (CRM.N)  

Wednesday: GitLab (GTLB.O)