US LABOR MARKET
We've just published our preview of Friday's employment report (PDF HERE):
- Nonfarm payrolls growth is seen at circa 160k in December as some recent distortions from hurricanes and strikes are increasingly in the rear-view mirror, and with a relatively narrow range to analyst estimates.
- The initial response rate to the establishment payroll survey increased notably back last month but we don’t rule out further large two-month downward revisions.
- The unemployment rate is broadly seen holding at 4.2%, although at an unrounded 4.246% in November it wouldn’t surprise if it rounded to 4.3%. A ‘high’ 4.3% would still be notable, though, for a fresh recent high.
- This release will also see annual seasonal adjustment factor revisions for the household survey. They’re typically modest but we nevertheless watch them for any changes in recent trends.
- These revisions only affect the household survey, i.e. not payrolls figures from the establishment survey, although the latter will have more significant annual revisions in next month’s release.
- The next 25bp cut from the FOMC is only just fully priced for the June meeting whilst the USD index is at recent highs with the real exchange rate particularly elevated on a historical basis. We feel market sensitivity would be greatest in event of a report with broad dovish implications.
206 words