Stocks rocketed higher thanks to a much stronger than expected labor report. The Dow reemerged above the 28,000 mark, gaining 337 points on the day and closing the week at 28,015.
The November jobs report was a hit, with a solid rise in payrolls, another drop in the unemployment rate, and decent growth in hourly earnings. The US economy created 266,000 jobs well above even the most optimistic estimates calling for an increase of 200,000. Both September and October job figures were revised higher. The unemployment fell a tenth of a point to 3.5% and seems range bound at this low level. Wages grew and are now up 3.1% over the past year while hours worked increased 1.6% over the past year. If we combine these two figures, we find that “total earnings” are up 4.8% year over year and is a reason why the US economy continues to roll along like a freight train through Kansas. Consumers make up over 2/3rd of the economy and strength in this area is more than enough to overcome the effects of a slowing manufacturing sector which accounts for roughly 11% of the economy.
The price of WTI crude oil was up a bit after OPEC plus 1 (Russia) agreed to cut oil production by 500,000 barrel per day. Oil has been moving higher in anticipation of this news, but the cuts were not all that much plus everyone knows that OPEC members will cheat when they need to. The other thought is that demand for oil from the Middle East is expected to fall by 1 million barrels per day as the US continues to grow and export its production. The US has now exported more oil for two months in a row than what it imported making the US a net exporter. WTI crude finished the day at $59.22 per barrel up 1.35%. Also hitting oil demand is a recent report out of Germany showing a weak economy with poor prospects for growth as auto production is slowing and auto layoffs are rising thanks to the EV and Tesla onslaught.