A better-than-expected October U.S. jobs report gave the Federal Reserve another sign of labor market improvement as it looks for an opportunity to begin raising interest rates. Despite the beat, central bankers still face pitfalls, market watchers told CNBC on Monday.
The Fed's policymaking committee has held interest rates near zero since December 2008 in a bid to increase lending and boost the economy in the absence of significant fiscal policy measures by lawmakers.
To be sure, the economy has been strong enough to withstand an interest rate hike for some time, and Friday's jobs report only strengthens the case for a December increase, said David Lebovitz, global market strategist JPMorgan Asset Management.
However, inflation presents more of a risk than many people appreciate, and prices could rise to the Fed's target of 2 percent as soon as March, he said Monday.
Low interest rates at a time of rising inflation raises the risk the economy will overheat.
"It takes about six to nine months for monetary policy to hit the economy, so I think the Fed by going in December, isn't necessarily too late, but further kicking of the can may put them a little bit behind the curve," Lebovitz told CNBC's "Squawk on the Street."
He also said he expects the U.S. consumer to hold up during the all-important holiday retail season as wages show signs of ticking up.
The wage picture is likely to look better in the coming months, but American paychecks don't look great, merely better, said Mark Vitner, senior economist at Wells Fargo Securities.
But the clearest source of concern for the U.S. economy is weakness overseas, he told "Squawk on the Street" on Monday.
The United States and U.K. are "islands of stability" in a world where growth is hard to come by, he said. If the dollar strengthens further on the expectation the Fed will raise rates sooner and higher than previously thought, the stronger greenback could negatively effect U.S. manufacturers, whose products would be more expensive to overseas buyers.
"The employment data and ISM last week looked a little bit better. I'm not completely sold that it offsets the weaker reports that we've seen in prior months, at least not yet," he said, referring to the Institute for Supply Management data on the services sector.
On Monday, the Paris-based Organization for Economic Cooperation and Development, a think tank funded by wealthy countries, cut its 2015 growth forecast to 2.9 percent in its biannual economic outlook from the 3 percent it forecast in September.
The OECD said the Federal Reserve should nevertheless go ahead with its first rate hike since the financial crisis as a recovery gains steam in the United States and Europe, despite a slowdown mostly centered on emerging markets and China.
Liz Ann Sonders, chief investment strategist at Charles Schwab, called the assessment "a little bit backwards," noting the weakness in emerging markets is tied to the downturn in the commodity cycle.
Lower commodity prices are putting pressure on resource-producing nations, but are seen as a long-term benefit to the United States as businesses reap lower input costs and consumers pay less at the gas pump.
"Not only have emerging economies never dragged the U.S. market down, what is afflicting those markets, those that are weak, are actually things that are to the benefit of the U.S. economy," Sonders told CNBC's "Fast Money: Halftime Report."
"If anything I think the strength in the U.S. economy will help keep the rest of the world — at least those not on the production side of commodities — afloat."
— Reuters contributed to this story.