An excitable reaction following jobs and retail sales data

Briefing.com Summary:

• The nonfarm payrolls part of the November employment report was better than expected, but the report overall wasn’t strong.
• Retail sales were flat in October, but there was some strength below the surface of that headline number.
• The probability of a rate cut at the March FOMC meeting moved up after this morning’s data.

A morning that had been light on headline excitement got a little more exciting—or perhaps we should say excitable—at 8:30 a.m. ET following the release of the November employment report and the October retail sales report.

Currently, the S&P 500 futures are down 13 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 81 points and are trading 0.3% below fair value, and the Dow Jones Industrial Average futures are down 43 points and are trading 0.1% below fair value.

The Treasury market’s initial response to the data had an excitable look to it as well. The 10-yr note yield went from 4.17% to 4.15% and now sits at 4.18%, unchanged from yesterday’s settlement. The 2-yr note yield, which is more sensitive to changes in the fed funds rate, went from 3.50% to 3.46% and now sits at 3.49%, down two basis points from yesterday’s settlement.

There wasn’t any change of note in the fed funds futures market in terms of expectations for the January FOMC meeting. The Fed is expected to leave rates unchanged then; however, the probability of a 25-basis-point cut at the March meeting moved up to 56.8% from 51.0% yesterday, according to the CME FedWatch Tool.

Notable headlines from the November Employment Situation Report:

• November nonfarm payrolls increased by 64,000 (Briefing.com consensus: 30,000). The 3-month average for total nonfarm payrolls increased to 22,000 from -8,000. October nonfarm payrolls -105,000. September nonfarm payrolls revised to 108,000 from 119,000.
• November private sector payrolls increased by 69,000 (Briefing.com consensus: 34,000). October private sector payrolls 52,000. September private sector payrolls revised to 104,000 from 97,000.
• November unemployment rate was 4.6% (Briefing.com consensus: 4.4%) versus 4.4% in September. Persons unemployed for 27 weeks or more accounted for 24.3% of the unemployed versus 23.6% in September. The U6 unemployment rate, which accounts for unemployed and underemployed workers, increased to 8.7% from 8.0% in September.
• November average hourly earnings were up 0.1% (Briefing.com consensus: 0.3%) versus a 0.4% increase in October. Over the last 12 months, average hourly earnings have risen 3.5% versus 3.8% for the 12 months ending in October.
• The average workweek in November was 34.3 hours (Briefing.com consensus: 34.3) versus 34.2 hours in October. The manufacturing workweek changed little at 40.0 hours. Factory overtime was unchanged at 2.9 hours.
• The labor force participation rate increased to 62.5% from 62.4% in September.
• The employment-population ratio decreased to 59.6% from 59.7% in September.

The key takeaway from the employment report will be the bump in the official unemployment rate and the softening in the U-6 unemployment rate. Both have helped substantiate the Fed’s concerns about downside risk to employment that served as the basis for the December cut.

The October retail sales report, meanwhile, was better than the headline suggests. Total retail sales were flat month-over-month (Briefing.com consensus: 0.3%) following a downwardly revised 0.1% increase (from 0.2%) in September. Excluding autos, retail sales rose 0.4% month-over-month following a downwardly revised 0.1% increase (from 0.3%) in September.

The key takeaway from the report is that there were solid increases in spending across many discretionary spending categories. The notable exceptions were building material and garden equipment and supplies dealers sales (-0.9%) and food services and drinking places (-0.4%). Department store sales (+4.9%), on the other hand, had a big month along with sporting goods (+1.9%) and nonstore retailers (+1.8%).

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Originally Posted on December 16, 2025 – An excitable reaction following jobs and retail sales data