vendredi 3 avril 2015
One Last Thing before the Week is Over
Posted on 06:37 by nice news
The US employment report stands between us and the weekend. With parts of Asia and nearly all of Europe closed, participation is obviously considerably lighter than normal. This coupled with significant positioning can make for dramatic moves.
At the same time, there is an asymmetrical risk. A robust report does not change the status quo. The relatively steady improvement in the labor market has not prevented scaling back of Fed hike expectations. Another strong report is unlikely to persuade the market that a June rate hike is more likely. A weak, however, could push market sentiment away from a September hike.
The weak ADP estimate and soft employment in the ISM manufacturing survey warn of the risk of disappointment with today’s report. At the same time, the weekly jobless claims continue to point to an improvement in the labor market. Continuing claims are at new cyclical lows.
Even though the ADP estimate does a fair job tracking the broad trending the non-farm payroll series, on a month-to-month basis, there are notable discrepancies. Indeed, in four of the past six months, the ADP's first estimate was lower than the BLS estimate. The average miss was 65k over those four months and 40k over the entire six month period.
Fed Chair Yellen has helped shift investors' focus from emphasizing unemployment rate, which has steadily fallen quicker than the Fed expected, and toward a wider range of measures. Yellen often has cited data from the JOLTS report, and the Federal Reserve has created a new measure, the Labor Market Conditions Index, both of which will be reported next week. That said, although the consensus does not expect it, there is some risk that the unemployment rate ticks down to 5.4% from 5.5%. The participation rate itself continues to bounce along the cyclical trough near 62.7%--62.9%. It has not been above 63% since last March.
Compensation has also become a more
At the same time, there is an asymmetrical risk. A robust report does not change the status quo. The relatively steady improvement in the labor market has not prevented scaling back of Fed hike expectations. Another strong report is unlikely to persuade the market that a June rate hike is more likely. A weak, however, could push market sentiment away from a September hike.
The weak ADP estimate and soft employment in the ISM manufacturing survey warn of the risk of disappointment with today’s report. At the same time, the weekly jobless claims continue to point to an improvement in the labor market. Continuing claims are at new cyclical lows.
Even though the ADP estimate does a fair job tracking the broad trending the non-farm payroll series, on a month-to-month basis, there are notable discrepancies. Indeed, in four of the past six months, the ADP's first estimate was lower than the BLS estimate. The average miss was 65k over those four months and 40k over the entire six month period.
Fed Chair Yellen has helped shift investors' focus from emphasizing unemployment rate, which has steadily fallen quicker than the Fed expected, and toward a wider range of measures. Yellen often has cited data from the JOLTS report, and the Federal Reserve has created a new measure, the Labor Market Conditions Index, both of which will be reported next week. That said, although the consensus does not expect it, there is some risk that the unemployment rate ticks down to 5.4% from 5.5%. The participation rate itself continues to bounce along the cyclical trough near 62.7%--62.9%. It has not been above 63% since last March.
Compensation has also become a more
One Last Thing before the Week is Over
Categories: One Last Thing before the Week is Over
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