Labor Market

Monthly employment data will take center stage on Friday morning as the US Department of Labor will report on the number of jobs added to the US economy in April, the unemployment rate, and key wage growth figures.

The official US jobs report for February was released on Friday morning, and despite a stellar reading for job creation – 313,000 jobs added in February against prior expectations of around 200,000 – the data was mixed overall, as wage growth was weak and the unemployment rate was slightly higher than expected.

February US jobs data, which will be reported on Friday morning by the US Department of Labor, is poised to take on increased importance for markets and investors.

The official US jobs report for January that was released on Friday morning was highly positive, easily beating expectations on both the headline data and, very importantly, wage growth.

The first official US jobs data for 2018, covering January, will be reported on Friday morning by the US Department of Labor. Consensus expectations are pointing to an anticipated improvement in non-farm payrolls (NFP) over December’s disappointing outcome. Around 180,000 non-farm jobs are expected to have been added to the US economy in January following a worse-than-expected showing of 148,000 jobs added in December.

AUD/USD has spent more than a month climbing sharply as the US dollar has taken a dive while the Australian dollar has been on a strong rebound.

The official US jobs data for December will be reported on Friday morning by the US Department of Labor, and consensus expectations are pointing to a likely continuation of the strong job creation that prevailed through much of last year (September weather disruptions notwithstanding).

The US jobs report for November was released on Friday. Although the headline non-farm payrolls number came in significantly better than expected at 228,000 jobs added in November against a prior consensus forecast of around 200,000 jobs, wage growth turned out lower than expected.

The official US jobs data for November will be reported on Friday morning by the US Department of Labor, and consensus expectations are pointing to a likely continuation of the strong job creation that has prevailed through much of the year.

On Friday, the official US jobs data for October will be reported, and expectations for a sharp bounce-back from September’s weather-related negative reading are high.

On Friday, the new jobs data for September will be reported, and due to the substantially adverse effect of recent hurricanes (Harvey and Irma) on the US economy, it is widely expected that September’s job growth was negatively impacted.

Ahead of the Reserve Bank of Australia’s interest rate decision and monetary policy statement due to be released on Tuesday in Sydney, the Australian dollar continues to be weighed down against a still-rallying and recovering US dollar. Expectations for any interest rate changes by the RBA from the current record low of 1.50% remain very slim, as RBA Governor Philip Lowe stated in August that: "the next rate move will be up, rather than down, but it will not be for some time."

The headline non-farm payrolls data for July, released on Friday morning, substantially exceeded expectations at 209,000 non-farm jobs added against prior expectations of around 180,000. In addition, June’s number was revised up from the originally-reported 222,000 to 231,000.

Though the US dollar received a boost late last week after a better-than-expected US jobs report, the Canadian dollar was boosted even more by a Canadian jobs report that far exceeded expectations, much like the previous month. Over 45K jobs were added in Canada in June against a prior forecast of around 11K. Furthermore, the Canadian unemployment rate ticked back down to a better-than-expected 6.5%. Therefore, although both the US and Canadian headline employment data easily beat expectations, Canada’s positive deviation from previous forecasts was substantially greater than that of the US, which helped prompt a sharp drop for USD/CAD this past Friday.

At first glance, Friday’s non-farm payrolls data for June far surpassed expectations at 222,000 jobs added against prior expectations of around 175,000. Additionally, May’s disappointing 138,000 figure was made slightly less disappointing by Friday’s upward revision to 152,000. Overall, however, the jobs report was mixed, as average hourly earnings came in lower than expected at +0.2% against a +0.3% forecast, and May’s +0.2% was revised down to +0.1%. These weaker wage growth numbers should exacerbate concerns that inflation may continue to lag. In addition, another less-positive aspect of the report was the unemployment rate, which ticked up to 4.4% against both the prior forecast and last month’s reading of 4.3%.

Wednesday’s release of minutes from the June FOMC meeting showed that Fed officials were divided on several fronts, including the timing of balance sheet reduction, the outlook for inflation and employment, and the impact of these economic conditions on the future trajectory of Fed monetary policy. These uncertainties have continued to weigh on the dollar, despite the rebound for the US currency that occurred earlier this week. Market expectations remain skewed towards one more Fed rate hike this year. But the prospects of such a hike, given these uncertainties, are not as clear as they have previously been.

Similar to what happened with US jobs data in March, a stellar ADP private employment number for May did not foretell an optimistic non-farm payrolls (NFP) outcome. The headline NFP reading for job creation in May came out on Friday a substantial disappointment at 138,000 jobs added against a prior consensus forecast of around 180,000.

As of Thursday morning, less than a day before Friday’s pivotal US non-farm payrolls (NFP) jobs report, futures markets (according to the CME Group’s FedWatch) are pricing-in more than a 95% likelihood of another 25-basis-point interest rate hike by the Federal Reserve during its mid-June meeting. This extremely high market-viewed probability has been further buoyed by Thursday’s ADP private employment report, which showed a stellar increase of 253,000 private-sector jobs in May against prior expectations of around 185,000. Leading the way in US private employment were services and construction, both of which saw broad increases in payrolls. Although the ADP report is not necessarily a very accurate pre-indicator of the official NFP jobs data from the US Labor Department – and sometimes even misses the mark dramatically – it does help indicate continued and increasing strength in the overall US employment picture, which bodes very well for an impending Fed rate hike.

Official US jobs data for April came out substantially better than expected on Friday, indicating that the previous month’s dismal data (which became even more dismal through a revision on Friday’s release), may just have been an outlier in an otherwise positively trending US employment environment.

The pound may have cleared the 1.25 hurdle on the back of the UK labour market report for February and March, but aside from the stronger wage growth the labour market data had some worrying pockets of weakness, which may suggest that the triggering of Article 50 is starting to have some economic effect.

The most closely-watched aspect of the US jobs report came out much better than expected on Friday, showing that the US economy added a stellar 227,000 jobs in January, significantly more than the 170,000 or so that were forecast. Pre-indicators earlier this week like the ADP private employment report and ISM manufacturing PMI employment had helped to telegraph a positive non-farm payrolls (NFP) number.

Like the preceding two months, the US jobs report for October that was released on Friday morning disappointed expectations. However, the reading still fell within reasonable range of forecasts, showing a relatively solid and stable employment picture that is unlikely to change the expected interest rate trajectory of the Federal Reserve. In addition, a few upside surprises in the report helped to reinforce both the current steadiness of the US economy and the rationale for a December Fed rate hike. Now that the jobs report is out of the way, though, the one immediate event that could very well impact the Fed’s interest rate considerations, as well as the direction of the financial markets, is the US presidential election coming up on Tuesday.

After 1) a first presidential debate in which Hillary Clinton was seen to have secured a major win over Donald Trump, 2) a vice-presidential debate where the Republican ticket gained back some ground with its supporters, 3) a scandalous revelation regarding a lewd tape of Trump’s self-professed “locker room talk” years ago, 4) a second presidential debate with mixed results for both Clinton and Trump, 5) a withdrawal of support for Trump by some prominent Republicans like House Speaker Paul Ryan, and 6) a release of additional hacked Clinton emails that could further damage the Democratic ticket, Clinton appears by most accounts to be leading the race with an increasingly wider margin.