US Jobs Growth Disappoints Estimates

Daily Analysis - 08/01/2017

Record Number of Americans Currently Outside the Labor Force

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US nonfarm payrolls came in shy of forecasts for the December reading as the unemployment rate ticked up slightly amid the labor force participation rate falling to near 35-year lows of 62.70%.  Mixed fundamentals weighed on the US dollar throughout the week as profit-taking sent gold prices to one month highs.

Last Week


The final nonfarm payroll job creation figures for 2016 came in below Wall Street estimates, printing at 156,000 new positions added versus expectations of 178,000.  Despite the revision higher of the November figure to 204,000 from the 178,000 initially reported, it was still not enough to prevent the unemployment rate from ticking slightly higher to 4.70% from 4.60%.  The one positive development was the 0.40% jump in hourly earnings during the month, displaying the fastest pace of growth since the last financial crisis.

Aside from US labor fundamentals, manufacturing data from across the globe showed positive momentum, with US, German, Italian, Spanish, UK, and Chinese purchasing managers’ indices all climbing.  In another sign that the aggressive easing actions of the European Central Bank is delivering results, the preliminary headline inflation figures for December showed growth of 1.10% during the period.

This marked the highest rate of inflation since September of 2013 and shows that the German inflation figures were not just a one-off event.  Finally, the Federal Reserve continued expressing its hawkishness, with the latest FOMC Meeting Minutes stressing the case for three rate hikes during 2017.

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The Week Ahead


China will be in the spotlight during the upcoming sessions as critical data relating to inflation and trade are set to be announced.  Producer prices are expected to show accelerated upside, with estimates anticipating 4.50% growth on a year over year basis through the end of December while consumer prices are forecast to remain on hold at 2.30%.

However, while inflation is expected to stay on hold or climb, the gains in trade reported a month earlier are set to dissipate.  The spectacular growth in imports and exports during the month of November are expected to fade, with exports down at a -3.50% annualized pace while import growth anticipated to slip to 2.70% from 6.70% in November.  Aside from these developments in Asia, the Euro Area is set to report the unemployment rate for the aggregate region alongside industrial production numbers before the ECB releases its account of the December monetary policy meeting.

Other important events scheduled throughout the week are US retail figures and producer price dynamics, comparable Australian retail numbers, and finally, UK manufacturing and industrial production figures for November.

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