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U.S. gains 271,000 jobs in October; unemployment 5% The U.S. economy created 271,000 new jobs in October to mark the biggest gain of the year, pushing the unemployment rate down to a seven year-low of 5%. Hourly wages also rose at the fastest year-over-year pace since 2009. The stellar October labor report suggests a slowdown in job creation toward the end of summer was temporary, and it raises the odds of the Federal Reserve lifting interest rates before the end of 2015. Economists polled had expected a gain of 180,000 nonfarm jobs. Employment gains for August and September were revised up by a combined 12,000, the Labor Department also said Friday. The government said 137,000 new jobs were created in September instead of 142,000. August's gain was raised to 153,000 from 136,000.
October NFP: Moving Our Fed Call To December - Barclays In light of today's strong employment data, Barclays Capital has moved the Fed call to a December rate hike.
"The October payroll report was very solid and exhibited broad-based strength. It suggests that labor markets have fully rebounded after slowing in August and September. When we moved our rate hike assumption to March 2016, we assumed that the volatility in financial markets would be longer lasting and the Fed would have trouble resolving their differences about the viability of rate hikes before year-end.
The October FOMC statement and Chair Yellen’s testimony to Congress were more hawkish than expected, suggesting the committee saw downside risks from global developments as having diminished and activity pointing to a “live possibility” of a rate hike in December. This change in communication, the faster dissipation in uncertainty, and a very solid payroll report necessitate a change in our call to December. We now forecast a federal funds range of 25-50bp in December, up from the current 0-25bp," Barclays projects.
US Employers Open More Jobs Even as Hiring Slows More "help wanted" signs popped up at the storefronts of US businesses as the third quarter was drawing to an end.
The number of vacant positions increased to 5.526 million in September, exceeding the 5.40 million the markets were expecting to see, and following a marginally upwardly revised 5.377 million in the previous month, fresh figures from the Department of Labor showed on Thursday. The original estimate for August had suggested 5.370 million claims.
The latest reading was the second-highest since the government began collecting the data back in December 2000, falling just short of the 5.668 million openings seen in July.
Even though it is one of the more lagging reports, released a full month after the latest employment data, it is among the data closely followed by Federal Reserve Chair Janet Yellen. She often mentions the hiring and quits rates as important indicators of labor market health. The former shows confidence of employers while the latter corresponds to optimism among consumers.
Businesses hired some 5.05 million workers in September, slightly fewer than a month earlier. As a result, the hires rate slipped to 3.5%, the lowest rate since January. The rate first hit a post-recession high of 3.7% in October and once more in June and has been mostly steady over the past year.
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NFP The Sequel; Trading The Report - BofA Merrill
With the much-anticipated 16 December FOMC meeting around the corner, the 4 December US non-farm payrolls (NFP) is one of the most important remaining data points.The significance of recent NFP surprises in driving asset prices has been increasing since summer 2014 and is near historical highs (Chart of the day). We last observed this pattern of market behavior during the 2004-2006 Fed hiking cycle, suggesting this relationship exists due to market expectations for rate policy normalization.
During the previous hiking cycle the importance of NFP surprises rose ahead of the first hike and continued to rise until the end of the hiking cycle. Despite high anticipation for the next Fed hike, the importance of the employment report could remain elevated even after the initial liftoff. This relationship is particularly pronounced now as the Fed has adopted a data-dependent stance, and each NFP report will likely continue to play a key role in informing the path of subsequent Fed policy decisions.
Trading the report:
Our regression analysis also quantifies the expected reaction to different levels of NFP surprises and generates a few observations potentially useful for trading future events. Since 2012:
Among liquid G10 pairs EURUSD and USDJPY exhibit consistent reactions to NFP surprises, tending to move 0.7% in favor of the USD for a +100k surprise. Somewhat surprisingly, AUDUSD is the least consistent among G10 USD pairs.
USDZAR and gold tend to be the most sensitive overall.
Oil and equities have R-squared near zero, suggesting the market is concerned about the growth implications of a December hike. In previous hiking cycles, positive NFP surprises were beneficial for oil and equities as they signaled economic expansion. This time, the concern of higher rates deterring global growth is causing a break from the historical relationship.
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Does anyone knows with how many average pips a couple minutes before the NFP ranges?
Here's your quick guide to Friday's big jobs report The last jobs day of 2015 is also the most important one.
On Friday morning at 8:30 a.m. ET, the Bureau of Labor Statistics will release the November jobs report.
Via Bloomberg, here's what Wall Street is expecting:
Payrolls gains are estimated to fall month-on-month after a gain of 271,000 jobs in October. But not only are the prior month's data subject to revision, the November estimates are consistent with the further improvement that the Fed needs to see.
On Wednesday, Yellen made it clear that she would argue for a rate hike when the FOMC meets in two weeks to decide. Yellen said that the labor market, although short of being at "full employment," made her confident that inflation would reach the Fed's 2% target and that the economic recovery would continue even with higher interest rates.
And so Friday's jobs report could serve as the final confirmation the Fed needs to take the step of raising rates for the first time in over nine years at its meeting in two weeks.
"A rate hike will be virtually certain if the November jobs report shows a gain of more than 140,000 nonfarm payrolls (roughly 200,000 is expected)," wrote Horizon Investments' Greg Valliere in a client note this week.
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Payrolls Due As China News Calms Briefly Not over in China yet
Last night was the quietest of the week in Asia with shares in China staging a relief rally and finishing the session in the green. A lot of the buying was courtesy of the state i.e. the authorities buying shares in order to generate confidence in markets. I doubt it can work too much further than the short term and the damage that has been done to investor psychology in the past 4 sessions will be a lot harder to quantify.
The People’s Bank of China’s strange game of chicken around the CNY fix has continued overnight. In the past few sessions the central bank has weakened the yuan by around a per cent, prompting additional falls in the offshore currency. Last night, they strengthened the yuan ever so slightly and the market has left both the onshore and offshore alone into the weekend.
There is no doubt in my mind that there is additional weakness to come and that while this market liquidity strategy may have headed off some of the concerns around the currency and the amount of money leaving the Chinese economy, doubts remain as to the efficacy of these measures on the Chinese economy. More will come from Beijing although we may have to wait until the beginning of the Lunar New Year celebrations a month from today.
December NFP: Payroll Growth Back To Trend - Barclays The following is Barclays Capital's reaction to today's US December jobs report.
December payroll growth of 292k was well above both our and consensus expectations (Barclays: 225k; consensus: 200k). The unemployment rate remained at 5.0% (5.008% rounded to three decimals). The participation rate ticked up one-tenth, to 62.5%. Our confidence in our view that the disappointing Q4 data indicate a soft patch rather than a more serious downturn is based primarily on the ongoing health of labor markets.
This employment report, combined with the very low level of initial claims, suggests that labor market momentum remains firmly in place. If so, history suggests that US economic data are likely to improve in the near term.
In particular, we do not believe consumption growth of 2.0% is consistent with the robust employment gains of the past few months. Nevertheless, trends in private consumption growth and other components of domestic demand bear further watching, particularly if labor markets were to slow in the months ahead or if the headwinds from abroad were to intensify substantially.
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