After a month in which hiring was largely muted due to storms and strikes, Friday’s jobs report could provide a clearer picture of where the job market is headed.

The Bureau of Labor Statistics is expected to report at 8:30 a.m. ET Friday that nonfarm payrolls rose by 214,000 in November, a significant increase from October’s meager gain of 12,000. This month’s reading was the worst for employment gains since December 2020.

One of the things that makes the report so crucial is that it will be the last comprehensive overview the Federal Reserve receives before its next monetary policy meeting on December 17th and 18th. Markets are betting heavily that the Fed will approve another quarter-percentage point rate cut, but that could change depending on how jobs develop.

“Well, it should be a pretty healthy number because it should rebound from (October) when we had (Hurricane) Milton and the (Boeing strike) that squeezed jobs,” said Kathy Jones, chief fixed income strategist on Schwab Center for Financial Research.

In fact, October’s number could rise after BLS investigators re-examine the monthly data. In the period after Corona, there were sometimes massive revisions to payrolls.

That could mean economic data will be chaotic for a few more months and the Fed’s job will become even more challenging.

“I expect it to be over 200,000 and the risk would probably be to the upside if there is a real recovery,” Jones said. “But I’m also not sure this jobs report will tell us much because of all the weather effects. “Will it really give us a clear view of the future, or will it just be more muddy data to deal with?”

It is critical now to get a clear picture for the Fed as policymakers seek to recalibrate their policies at a time when annual inflation rates are high but easing and there is increased focus on the labor market is.

Aside from the October report, employment has shown a mostly slower trend since about April, with wage gains averaging about 128,000 new jobs per month while the unemployment rate rose to 4.1%. Fed policymakers want to lower their benchmark short-term lending rate to a more neutral level while balancing their focus between inflation and employment.

“This is going to be absolutely noisy because a storm and a strike disruption will impact two months of data, the data for the month when people are not working, and the data for the next month when they return to work,” BNY said -Economist Vincent Reinhart, a former Fed official who worked at the central bank for 24 years.

“The Fed’s view is that the slowdown in nonfarm payrolls has essentially leveled off trend over 2024 – trending at just over 100,000 jobs added per month – and that hasn’t been a concern,” he added added. “It was actually welcome because the trend is sustainable.”

In fact, recent signals suggest that the labor market is calming but not worsening.

Weekly initial unemployment insurance claims remained fairly stable at around 220,000, although continuing claims reached their highest level in about three years in early November. Taken together, the numbers suggest that companies are not laying off workers en masse, but are also not rehiring those who lose their jobs.

A Fed economic report Wednesday – the “Beige Book” – a summary of the current situation – described hiring as “subdued as labor turnover remained low and few companies reported increases in their headcount,” the report said said the number of layoffs was “low”, but employers expressed caution about the future pace of hiring and showed greater enthusiasm for entry-level and skilled jobs.

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

The Fed must weigh all of these factors, as well as concerns about rising inflation, when making its interest rate decision and outlining its outlook for the future.

If the labor market can remain stable, this should not put additional pressure on inflation, said Reinhart. “So the strategy is to try to keep demand trending, because when growth and demand are trending, then you should maintain the current state of the labor market and the labor market is approximately in equilibrium,” he added.

In addition to the general wage increases, the unemployment rate is also expected to rise to 4.2% as people return to the labor market from October. In addition, average hourly wages are expected to increase by 0.3% month-on-month and 3.9% year-on-year, both representing a slight decrease from the previous month.