Unemployment Shows Global Improvement

Weekly Report - 10/01/2016

North American and European Jobless Figures Show Strong Progress

A blistering US nonfarm payroll report combined with stronger European employment figures helped to ease some concerns that the global economy is going through a deeper correction.  However, weakness from China did see risk aversion pickup amongst investors that piled into haven assets as equities experienced one of the worst opening weeks on record.

Weekly Review

Nonfarm payrolls in the United States surged past expectations of 200,000, printing at 292,000 jobs added with both the November and October figures also revised higher.  European unemployment managed to show great strides, falling to the lowest levels since 2011, currently standing at 10.50%.  However, much must be done for the figure to improve further, with the onus resting on national governments to implement fiscal stimulus measures.  The major news was the large amount of volatility emanating from China after local equity markets were halted twice within the week following major plunges in shares.  The continued Yuan devaluation is creating the conditions for falling confidence amongst investors.  Gold prices were sensitive to the growing concern, briefly climbing back $1100 per troy ounce.  The bearish bias in oil prices remained despite growing hostilities between Saudi Arabia and Iran as the supply-demand imbalance stays intact.  Prices of the WTI and Brent benchmarks hit new multi-year lows before managed a minor upside pullback following the capitulation lower.


The Week Ahead

The key events coming up in the sessions ahead include Chinese trade figures and a monetary policy decision from the Bank of England.  Alongside the trade balance which is expected to see the surplus retreat modestly, China will be releasing annualized import and export figures.  Both numbers are expect to contract additionally versus the prior month as concerns about the global economy and faltering international trade weigh on the export economy.  The Bank of England is unlikely to adjust policy in the upcoming meeting with interest rates expected to remain on hold at 0.50% while policymakers await a rebound in inflation before beginning a tightening cycle.  Other important figures include the upcoming US retail sales data for the month of December.  Early indications are forecasting the figures to remain in expansionary territory as holiday sales contribute to upside.  Australia is also set to report on its own unemployment with the rate expected to rise modestly to 5.90%. 


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