Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

PREVIEW: US Nonfarm Payrolls (Nov'21)

By Newsquawk Voice Ltd (Ryan Anderson)Market OverviewDec 03, 2021 09:33
uk.investing.com/analysis/preview-us-nonfarm-payrolls-nov21-200503908
PREVIEW: US Nonfarm Payrolls (Nov'21)
By Newsquawk Voice Ltd (Ryan Anderson)   |  Dec 03, 2021 09:33
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Analysts look for 550k nonfarm payrolls to be added in November, similar to October's 531k; the jobless rate is seen falling by one-tenth of a percent to 4.5%; the Fed appears almost certain to announce a quickening in the pace of asset purchase tapering at its December meeting, but analysts will be carefully watching measures of labour market slack to gauge the progress towards the Fed's 'three tests' for rate hikes.

Participation was unchanged in October, employment-population ticked up by 0.1ppts, while the U6 measure of underemployment fell 0.2ppts; with the inflation tests met, the labour market data will form a key part of the Fed's arguments for rate hikes, and any significant improvement in these metrics may see markets further price in tighter rates next year.

Meanwhile, labour market gauges have generally been constructive in November: the rate of initial jobless claims going into the November survey period improved relative to the October window; ADP's gauge of payrolls was in line with expectations, though the pace eased vs October; business surveys saw employment sub-indices improve and are alluding to a very tight labour market, whilst announced job cuts have fallen in the month to the lowest since 1993.

EXPECTATIONS

Nonfarm payrolls are expected to print 550k in November vs 531k in October (private payrolls expected at 530k vs 604k prior, manufacturing payrolls expected at 45k vs prior 60k); the 3-month average nonfarm payrolls trend rate eased to 442k in October (vs 629k in September), the 6-month average rose to 666k (from 622k) and the 12-month average eased to 481k (from 494k).

The unemployment rate is seen declining by 0.1ppts in November to 4.5%; analysts will be eyeing the measures of slack; last month, the participation rate was unchanged at 61.6% (vs 63.6% in February 2020), U6 underemployment declined by 0.2ppts to 8.3% (vs 7.0% in February 2020), and the employment-population ratio rose 0.1ppts to 58.8% (vs pre-pandemic 61.1%).

Meanwhile, average hourly earnings are seen rising 0.4% M/M, with the annual measure expected to rise by 0.1ppts to 4.0% Y/Y, and average workweek hours are likely to be unchanged at 34.7hrs.

POLICY FOCUS

Fed Chair Powell this week delivered hawkish testimony to lawmakers, where he stated that the economy had continued to strengthen, the labour market had continued to improve, and he sees inflation moving down significantly over the next year. He added that it was appropriate to consider wrapping up the tapering of asset purchases a few months sooner, which participants will discuss at the December FOMC.

Powell telegraphing the debate in advance may have taken some of the sting out of incoming economic data -- the rationale being that the Fed is set to accelerate the taper barring any significant deterioration in labour market and inflation data before the December 15th confab -- but Powell still suggested that there was a three-part test for raising rates (economy at maximum employment, inflation at 2%, inflation on track to moderately exceed 2% for some time); Fed officials have attempted to break the link between tapering and eventual rate hikes, but forward-looking markets will be assessing incoming data within the context of the three tests, and will price expectations of the Fed rate hike trajectory accordingly.

The inflation test has been met, but Powell said there was still ground to cover to reach maximum employment, though he has previously said that could be achieved by the middle of next year; this week's labour market data, therefore, remains a key part of the eventual rate hike debate.

SLACK

Taking an aggregate of the headline since March 2020, there are still some 4.44mln nonfarm payrolls to be recouped to get back to pre-pandemic levels. Goldman Sachs explains that it has been childcare constraints and elevated fiscal transfers which have likely weighed on participation, but these factors should have only a small effect going forward, but it may still take some time for some people to feel comfortable in returning to work, leaving some potential for longer-lasting drags.

"We continue to expect that the labour force participation rate will increase in the near-term, but we have nudged down our participation rate forecast to 1ppt below trend at end-2021 (61.9%) and 0.5ppts below trend at end-2022 (62.1%)," the bank says, "but because jobs are abundant and residual weakness in participation in mid-2022 will likely be due to changes in fiscal policy, wealth, and worker preferences, we expect that the FOMC will judge any participation shortfall that remains at that point to be structural or voluntary and will update their maximum employment goal accordingly."

JOBLESS CLAIMS

In the week that traditionally coincides with the BLS survey window for the jobs report, initial jobless claims were little changed at 270k from the prior week's 269k; but since the October jobs report survey window, claims have eased from 351k. Continuing claims, meanwhile, printed 2.049mln in the survey week, down from 2.11mln in the prior week, and lower than the 2.81mln in the October survey period.

Pantheon Macroeconomics said that the trend in initial jobless claims remains firmly downward, but the read may not be clear in the holiday season: "Unfortunately the numbers will be volatile over the holidays, as usual, and the next clean read on the data will be in mid-January," and by then, "we think claims will be close to the lows seen in the pre-COVID cycle, about 210K."

ADP (NASDAQ:ADP)

The ADP's national employment gauge saw 534k job additions to the US economy in November, more or less in line with the 525k forecast; the prior was revised down trivially by 1k to 570k. ADP's economists noted that the labour market recovery continued to "power through" its challenges last month.

"Job gains have eclipsed 15 million since the recovery began, though 5 million jobs short of pre-pandemic levels," ADP said, "service providers, which are more vulnerable to the pandemic, have dominated job gains this year."

On the pandemic, ADP's economists said it was too early to tell if the Omicron variant could potentially slow the jobs recovery in coming months.

BUSINESS SURVEYS

Within the ISM manufacturing report, the employment index rose by 1.3 points to 53.3, remaining in expansion for a third month, with the report noting some indications that the ability to hire is improving, though this is being partially offset by the challenges of turnover and backfilling.

"Survey panellists’ companies are still struggling to meet labour-management plans, but there were modest signs of progress," ISM said, "an increasing share of comments noted improvements regarding employment," where "an overwhelming majority of panellists indicate their companies are hiring or attempting to hire."

51% of those surveyed were expressing difficulties in filling positions, with the situation becoming more acute in the month.

Meanwhile, the services ISM is released after this month's jobs data, but using the IHS Markit flash November PMIs as a proxy, similar themes have been seen. IHS Markit said that pressure on capacity persisted amid labour shortages, with backlogs of work rising at the second-fastest pace on record. "Firms sought to expand their workforce numbers, but employment growth was held back by challenges finding suitable candidates."

JOB CUTS

Challenger's November report said that announced job cuts had dropped to 14,875 from the 22,822 in October, the lowest monthly total since May 1993. Year-to-date, employers have announced plans to cut 302,918 jobs from their payrolls, the lowest January-November total on record, and vs 2,227,725 vs the same period in 2020. Challenger said that "with the Omicron variant emerging and the unknowns that come with its spread, coupled with the ongoing difficulty hiring and retaining workers, it’s no surprise job cuts are at record lows," adding that "employers are spread thin, planning best- and worst-case scenarios in terms of COVID, while also contending with staff shortages and high demand."

PREVIEW: US Nonfarm Payrolls (Nov'21)
 

Related Articles

PREVIEW: US Nonfarm Payrolls (Nov'21)

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email