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US Payrolls Miss by Wide Margin

Daily Analysis - 09/04/2017

Economy Adds Least Jobs in 10-Months Even as Unemployment Rate Improves

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Job creation in the United States missed economist estimates by a wide margin during the month of March as colder weather and weaker government hiring contributed to sliding labor fundamentals, though the unemployment rate fell to 4.50% during the period.

Last Week


The United States was in the spotlight last week as a combination of payrolls, the latest FOMC Minutes, and the bombing of Syria dominated headlines.  Unemployment figures proved to be a major disappointment after only 98,000 jobs were added even though the jobless rate fell to 4.50%.  Apart from labor data, the latest FOMC minutes indicated that the Federal Reserve would gradually wind down its balance sheet.  This tightening strategy would complement plans for an additional two rate hikes before the end of 2016.

 

In other news, US President Donald Trump ordered airstrikes in Syria following a chemical weapons attack, raising risk premiums in precious metals.  Switching gears, unemployment in the Euro Area fell to its lowest point since May of 2009, reaching 9.50%.  Meanwhile, the Reserve Bank of Australia left rates on hold at a record low 1.50%, but remains in a tricky situation as inflation remains low amid the climb in housing prices. Oil prices managed to finish the week higher despite US inventories hitting a record 534 million barrels.  Production continues to grow, reaching 9.147 million barrels per day.  Adding to pressure was the number of operational oil rigs climbing to the highest point since September of 2015, gaining now for 12-straight weeks, per Baker Hughes.

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The Week Ahead


Front and center in the week ahead will be inflation figures from across the globe, beginning with the UK which is expected to see headline inflation remain on hold at 2.30%.  In addition, upcoming French and Italian figures are forecast to stay steady at their respective rates.  Shifting to the US, producer price inflation is projected to continue rising on both a core and headline basis while core consumer prices rise modestly and headline prices slip by 0.10% to a 2.60% annualized pace.  China will also be reporting on inflation, with annualized CPI forecasts coming in at 1.00%.

Apart from inflation, China will announce trade data for March, with exports expected to rebound back into positive territory after February contraction while import growth slides to 18.00% as the Lunar New Year data skew finally passes.  The United Kingdom and Australia will also be reporting their latest respective labor data.  To cap off the week, the Bank of Canada will gather to determine the latest steps for monetary policy, with most market participants expecting no change in interest rates which are currently holding fast at 0.50% as the impact of higher energy prices and improving fundamentals continue to sweep across the country.

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