What’s expected:
- Consensus estimate +60K (range +19K to +155K)
- November +64K
- Private consensus estimate +64K
- Unemployment rate consensus estimate: 4.5% vs 4.6% prior
- Participation rate consensus 62.5% prior
- Prior underemployment U6 prior 8.7%
- Avg hourly earnings y/y exp +3.6% y/y vs +3.5% prior
- Avg hourly earnings m/m exp +0.3% vs +0.1% prior
- Avg weekly hours exp 34.3 vs 34.3 prior
December jobs so far:
- ADP report +41K vs +50K expected and -29K
- ISM services employment 52.0 vs 49.0 prior — 10 month high
- ISM manufacturing employment 44.9 vs 44.0 prior
- Challenger Job Cuts 35,553 y/y vs 71,321 — 17 month low
- Philly employment +12.9 vs +6.0 prior
- Empire employment 7.3 vs 6.6 prior
- Initial jobless claims survey week 224K vs 225K expected
Looking through these numbers, there are plenty of reasons to see upsides to +60K and potentially in a big way. A reading close to 100 would end the slim hopes of a January cut and deeply slash the 43% chance of a March cut that’s currently priced in.
Seasonally, there is a minuscule drag on non-farm payrolls in December, according to BMO with the report missing 52% of the time and beating 48% of the time.
non-farm payrolls chart
In general, the US dollar outperforms on strong data and slides on weak data, with USD/JPY generally the cleanest trade on that theme. In contrast, the stock market generally dislikes a strong jobs report as it diminishes the chance of a rate cuts from the Federal Reserve.
On the unemployment rate, note that the unrounded figure in November was 4.564%, which is very close to being rounded down to 4.5%. The market increasingly watches those margins so be wary of a slight change looking like a whole tick.
