Unexpected Leap in U.S. Employment Last Month Dominates Friday’s News

December 6, 2019

U.S. non-farm payroll jobs increased 266k in November. Not since January had NFP risen so sharply, and the rises in September-October were revised upward by a combined 41k as well. Even with the resolution of the GM strike, these figures dwarfed expectations. Moreover, the jobless rate fell back 0.1 percentage point to a multi-decade low of 3.5%, and average hourly earnings growth (3.1% on year) stayed above the 3% psychological threshold for a second straight month.

Share prices, the dollar, and the price of oil are ending the week on a very  positive note as a result. U.S. stocks are up about 1% thus far. Stock markets in France, the U.K., Spain, Hong Kong and South Korea are also up at least 1%. WTI oil is 1.2% firmer, while gold is down 1.1%. The dollar shows overnight gains today of 0.7% versus the loonie, 0.6% relative to the euro, 0.5% against sterling, and 0.4% vis-a-vis the Swiss franc. By comparison, the greenback edged down 0.1% against the yen, Aussie dollar, yuan and peso.

As robust as the U.S. monthly jobs report proved, Canada’s labor force survey was a clunker. Canada’s level of jobs crashed 71.2k, with nearly equal losses among part-time and full-time workers. The unemployment rate catapulted 0.4 percentage points higher to 5.9%, and on-year wage growth remained steady at 4.4%. Not only did the loonie depreciate in response, but also the 10-year Canadian sovereign debt yield dropped by four basis points. But Canada’s stock market joined the global party and  is up 1%.

The U.S. consumer sentiment index compiled by the University of Michigan/Reuters improved in December to a 7-month high of 99.2 from readings of 96.8 in November and a low of 89.8 in August. This year’s high back in May was at 100.

Today’s report on German industrial production, a monthly drop of 1.7% and the largest 12-month decline of 2019 (5.3%), was even more weak relative to analyst expectations than Thursday’s release of German factory orders. October demand of capital goods orders swooned 4.4% on month.

Japan released two economic indicators. The 12-month rise of labor cash earnings in October matched September’s nine-month high. However, following a 2-percentage point hike on October 1 of the national sales tax, household spending that month recorded an 11.5% monthly dive and the greatest on-year slide (5.1%) in 43 months.

Australia’s construction purchasing managers index fell 3.9 points to 40.0 in November, lowest since July’s score of 39.1. Monetary officials in Australia have been watching the housing market carefully.

Two countries reported November consumer  price data today. Brazilian inflation accelerated to a 3-month high of 3.27%, while Russian inflation sank to a 13-month low of 3.5%.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: , ,


Comments are closed.