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Mixed Jobs Report, but Unlikely to Deter Expectations for Fed Hike

Summary:
United States The US dollar has slipped lower in response to the jobs data, but quickly recovered. The details are mixed, but is unlikely to change views on the outlook for Fed policy. The headline job creation was in line with expectations at 178k. Job growth of the back two months were shaved by 2k, concentrated in October. U.S. Nonfarm Payrolls, November 2016(see more posts on U.S. Nonfarm Payrolls, ) Source: Investing.com - Click to enlarge Unemployment Rate The unemployment rate dropped to 4.6%, the lowest since 2007. The underemployment rate fell to 9.3% from 9.5%, the lowest since 2008. U.S. Unemployment Rate, November 2016(see more posts on U.S. Unemployment Rate, ). Source: Investing.com - Click to enlarge Participation Rate The declines were larger than one would have expected if driven by the decline in the participation rate, which slipped to 62.7% from 62.8%. U.S. Participation Rate, November 2016(see more posts on U.S. Participation Rate, ) Source: Investing.com - Click to enlarge Average Weekly Earings The notable disappointment lies with average hourly earnings. Rather than rise 0.2% on the month, they fell by 0.1%, which brought the year-over-year rate back to 2.5% from 2.8%. The long-end of the curve likes the lower wage pressure, with the 10-year yield slipping 3-4 bp.

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United States

The US dollar has slipped lower in response to the jobs data, but quickly recovered. The details are mixed, but is unlikely to change views on the outlook for Fed policy.

The headline job creation was in line with expectations at 178k. Job growth of the back two months were shaved by 2k, concentrated in October.

U.S. Nonfarm Payrolls, November 2016

(see more posts on U.S. Nonfarm Payrolls, )
Mixed Jobs Report, but Unlikely to Deter Expectations for Fed Hike

Source: Investing.com - Click to enlarge

Unemployment Rate

The unemployment rate dropped to 4.6%, the lowest since 2007. The underemployment rate fell to 9.3% from 9.5%, the lowest since 2008.

U.S. Unemployment Rate, November 2016

(see more posts on U.S. Unemployment Rate, )
Mixed Jobs Report, but Unlikely to Deter Expectations for Fed Hike

. Source: Investing.com - Click to enlarge

Participation Rate

The declines were larger than one would have expected if driven by the decline in the participation rate, which slipped to 62.7% from 62.8%.

U.S. Participation Rate, November 2016

(see more posts on U.S. Participation Rate, )
Mixed Jobs Report, but Unlikely to Deter Expectations for Fed Hike

Source: Investing.com - Click to enlarge

Average Weekly Earings

The notable disappointment lies with average hourly earnings. Rather than rise 0.2% on the month, they fell by 0.1%, which brought the year-over-year rate back to 2.5% from 2.8%. The long-end of the curve likes the lower wage pressure, with the 10-year yield slipping 3-4 bp.

Today’s report is unlikely to force a re-think by investors on either the trajectory of Fed policy or the outlook for the US economy. There may still be some scope for upward revisions to Q3 US GDP, and Q4 is tracking above the rolling four-quarter average.

U.S. Average Weekly Earnings YoY

(see more posts on U.S. Average Earnings, )
Mixed Jobs Report, but Unlikely to Deter Expectations for Fed Hike

Source: macro.economicblogs.org - Click to enlarge

Canada Employment Change

Canada reported its jobs data as well. The headline job growth of 10.7k jobs overstates the case. Canada lost 8.7k full-time positions after losing 23.1k in October. Part-time positions grew by 19.4k.

Canada Employment Change, November 2016

(see more posts on Canada Participation Rate, )
Mixed Jobs Report, but Unlikely to Deter Expectations for Fed Hike

Source: Investing.com - Click to enlarge

Canada Unemployment Rate

Unlike what we saw in the US, the full decline in Canada’s unemployment rate to 6.8% from 7.0% can be fully explained by the drop in the participation rate (65.6% vs. 65.8%).

Canada Unemployment Rate, November 2016

(see more posts on Canada Unemployment Rate, )
Mixed Jobs Report, but Unlikely to Deter Expectations for Fed Hike

Source: Investing.com - Click to enlarge

Canada Participation Rate

The Canadian participation is nearly three percent higher than the American one. On the other side, Canadian unemployment is two percent higher.

Canada Participation Rate, November 2016

(see more posts on Canada Participation Rate, )
Mixed Jobs Report, but Unlikely to Deter Expectations for Fed Hike

Source: Investing.com - Click to enlarge

Marc Chandler
He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.

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