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Investing.com--The Fed will fly blind on the labor market heading into its crucial December meeting as the official unemployment rates for October and November won’t be available to policymakers in time, dimming the prospect of a December rate cut, Morgan Stanley economists warned in a new report.
“The FOMC will not see the unemployment rates for October or November before the December 9-10 FOMC meeting. This lowers the probability of a December rate cut,” Morgan Stanley’s economists wrote, pointing out that only September’s unemployment rate will be visible to policymakers when they meet.
This will further deprive Fed officials of a “full picture” of hiring trends. The October unemployment rate “will never be published,” according to the Bureau of Labor Statistics’ revised calendar, while the November figure will not arrive until Dec. 16.
The FOMC will, however, get JOLTS data for both September and October due Dec. 9, but while that "will give some indication of the direction of payrolls,” the economists cautioned that “payrolls alone, unless they move extremely sharply, do not tell the FOMC whether the labor market is easing or tightening, and an easing labor market is the key argument for a December rate cut.”
This information void has put even greater weight on jobless claims, retail sales, and anecdotes about Black Friday spending to tip the scales for a rate move.
“A cut is still possible if jobless claims, retail sales, and anecdotes about Black Friday spending show enough weakness, or if the September unemployment rate deteriorates more than we expect,” the economists said.