Waiting for Jobless claims and NFP after ADP
In October, the newly created jobs increased by 531K, and yesterday's ADP numbers also were better than expected. Now, for a better understanding of the US labor market situation, we need to wait for today's initial jobless claims and tomorrow's Nonfarm payroll employment data.
We can see strong growth in the US labor market in the recently published data, which shows that it is in the correct way of normalization, and labor shortages, are beginning to die down. The main reasons can be the ending the unemployment benefits in September and higher wages. Average hourly earnings rose 0.4%in October, and earnings are now 4.9% more than a year ago. The unemployment rate in October also was down to 4.6% from 4.8% in September.
Yesterday, we had The ADP National Employment Report, which is the measure of the monthly change in non-farm, private employment, based on the payroll data of approximately 400,000 U.S. business clients. November numbers printed an increase of 534,000, slightly higher than the market's expected increase of 525,000. The report shows that the largest increase in the number of employment in large enterprises, with an increase of 277,000, while in the medium and small businesses created jobs, increased by 142,000 and 115,000 respectively.
Data details show that the service sector had a great recovery with the leisure and tourism industry recording an increase of 136,000 new jobs. The professional and business increased had 110K new jobs. Jobs in trade, transportation, and public utility industries also increased by 78K. Education and health had 55K jobs and jobs numbers in other services increased by 22,000. Financial sectors had just 13K new jobs, while the technology industry created 10K jobs. Overall, the ADP data reflects that the labor market is still growing steadily, but it is still far from pre-pandemic levels.
Pointing that the latest news reported that the first case of Omicron virus infection was detected in the United States yesterday, we are still waiting to see that US businesses continue to be a constraint on hiring in November and December as well. Identifying the new version of Corona cannot affect the November data, since the data are covering the first three weeks of the month. However, for December numbers, it can be effective, if the current data about Omicron, turns to be correct. In terms of the November employment report, the estimate is a 600K gain, which can be above consensus expectations.
Positive employment data will help the USD bulls and can put more pressure on the stock markets, since it will increase the chance of more tightening policies, and vice-versa.