- A prominent theme in 2017 was the solid pace of job creation in the US
- The ADP national employment report sets the tone for the US NFP data
Today is the day- the most important economic data, the US Non-Farm Payroll number, on the face of the earth will reveal its colour. This number sets the trading tone and the trend for the rest of the month for traders. Today’s number would provide us significant clues if the moderate growth in the US economy has left any impact on the jobs market, most importantly on the wage growth. Since the financial recession, the jobs market has been strengthening and this momentum was set by former President Barak Obama and Mr Trump is reaping the rewards.
A prominent theme in 2017 was the solid pace of job creation in the US and this pushed the 12-month moving average to 170K but this number is well below (the moving average touched 260K in 2015) when Obama was in the office. So whatever you read in President Trump’s tweet, facts states a different story. However, to President Tump’s credit, companies in the US did add approximately 2.5 million workers in 2017.
The ADP national employment report sets the tone for the US NFP data and the number released yesterday was robust with a reading of 250K when the consensus was for 190K. The estimate for the US NFP data is for 190K which is slightly on the downside- compared to the November reading of 228K. Nonetheless, even 190K is above the underlying trend that is your 12, 6 and 3-month moving average. Given the seasonality factor for December; hiring trend start to tilt downward and becomes even worse in January, and the strong ADP report, we do think 210K could be the number that we would see today.
A gradual increase in the hourly wage earning isn’t going to ignite the fire for the US dollar. We think that we may see a minor uptick in this number by 0.1% from its previous reading of 0.2%. The average weekly hour number could remain stable in our estimate at 34.5 hours. however, if the number reverts to its 12-month average of 34.4, it may knock the dollar index lower.