Nordea has done a great job on this so it worth listening to:
Despite November’s slowdown in hiring, with only 210K new non-farm payrolls, less than half of consensus, the November unemployment rate dropped to 4.2%, down from 4.6% in October. Federal Reserve Bank of St. Louis estimates the 2021Q4 NAIRU to be 4.45%. NAIRU stands for the non-accelerating inflation rate of unemployment, which is the level of unemployment consistent with constant inflation. No one should be surprised that an unemployment rate of 4.2% increases the risk of wage and price inflation.
The latest survey release from The Conference Board suggests that the labor market will tighten further into 2022. Workers report that jobs are increasingly easier to find. All the while, firms find that they struggle to find qualified candidates to fill in available positions. The labor force participation rate, the ratio of the working-age Americans who either have a job or are available at the job market, increased to 61.8% in November, up 2%-points from October, potentially easing the demand for the labor force a little.
