Specialty Capital News and Views: Employment Situation Nov 2023

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Today we saw the release of the monthly Non-Farm Payrolls report. Payroll numbers came in at 199k, above estimates of 180k (though revised numbers for September and October show a drop of 35k).

The biggest detail market pundits are looking at is the Unemployment rate which dropped 0.2% to 3.7%. Rates sold off on this news. This is one of the gauges the FED looks at when adjusting rates at their meetings. Our view is that bellwether for inflation is what will drive rate cuts, especially if the decline in inflation continues for the next several months.

Currently, Fed Futures are showing the first rate cut at a 60% probability in Q1. In fact, the rate cut “bets” have risen in recent weeks post Fed “Hawkish” Governor Waller flagging a policy pivot. (See speech below)

November was a difficult month in our view to steer as the Thanksgiving week put a damper on small business owners moving forward on transactions. Submissions were down across the board with all our referral partners. December is looking much stronger so far but we continue to be thoughtful in our offerings to certain SIC codes. We remain aggressive in commercial construction and specialty contractors.

We have seen increased competition on deal transactions where small business owners are speaking to multiple brokers. We have now adjusted this in our underwriting and will be including a “Decline” for excessive ISO submission.

Happy Funding!

Board of Governors of The Federal Reserve System
Speech by Govenor Waller on the economic outlook

federalreserve.gov • 11 min read

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