According to RBC Captial's November jobs report forecast, the unemployment rate will increase to 4% with labor force participation to remain the same. Growth in ADP's private payroll data has also shrunk in recent months. What does this mean for the labor market at large?

RBC Capital Markets US Economist Michael Reid joins Yahoo Finance to discuss his forecast and what this could mean for the labor market and the Federal Reserve's monetary policy going forward.

"We're looking for the headline payroll gain to come in around 185,000. But, We are looking for the unemployment rate to tick up to 4%. That would be in line with what we saw with the continued claims number ticking up throughout November," Reid says, following up: "I think for the Fed, they're still keeping an eye on inflation. We don't expect them to turn their focus to labor just yet. We need inflation to come down much more in line with their target."

Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

Video Transcript

- I also want to bring into our conversation the JOLTS report, which was out earlier this week. What stands out to you in terms of is there-- sometimes some executives point out there's a mismatch in terms of the skills gap and the job openings that are out there. What stood out to you in terms of the direction of the JOLTS report?

MICHAEL REID: Sure. So we are expecting the JOLTS, the job openings in particular to continue to come down. There are still some sectors that do need to recover in terms of their pre-COVID levels, notably leisure and hospitality. But there, I think you have some structural issues, namely geographic mismatches. So you have job openings in places where workers aren't necessarily located.

BRAD SMITH: I think you just said something really interesting I just wanted to double back to especially within technology right now because it seemed like when the entire kerfuffle and coup was taking place at OpenAI, there were a number of big tech firms that absolutely opened their doors and said, hey, whatever you are being paid there, we're willing to add on to that, either match it, or even give you more in compensation in one form or another. So it seems like even though the cuts have taken place, and that filtered through and impacted some of that wage figure as you were tracking it, it's also interesting because many of them are still holding perhaps a little bit of space for where there are key opportunities to take on employees for key areas that are growth parts of their business too. How could that perhaps have a broader impact as we go into next year, and AI is still anticipated to be one of the larger themes too?

MICHAEL REID: Yeah, absolutely. If you think about the staffing structure of industries, it really comes down to occupations. So there when you think about, say software engineers or computer programmers, those are the types of jobs that are still in very high demand and very hard to find workers with those particular skill sets. Where you do see job losses in the broader tech sector may not necessarily be within those occupations.

- And, Mike, before we lose you, I want to get your prediction for the jobs report. What's your number for both sides?

MICHAEL REID: Sure. So we're looking for the headline payroll gain to come in around 185,000. But we are looking for the unemployment rate to tick up to 4%. And that would be in line with what we saw with the continued claims number ticking up throughout November.

- And if it does hit that level, what do you think that signals to the Fed?

MICHAEL REID: You know, I think for the Fed they're still keeping an eye on inflation. We don't expect them to turn their focus to labor just yet. We need inflation to come down, much more in line with their target.