Employment: U.S miss, Canada beat expectations

U.S unemployment rate falls to a 49-year low

The September U.S unemployment rate fell to +3.7% from +3.9% in August, the lowest rate since 1969.

The U.S non-farm payrolls rose to a seasonally adjusted +134K in September, the smallest gain in the past 12-months.

It would appear that Hurricane Florence may have had a bigger than expected negative impact on September payrolls.

Digging deeper, +150K Americans entered the labor force, keeping the number of adults working or seeking work steady at +62.7% participation rate.

Wages

Wages increased last month and advanced +2.8% as expected. The market was looking for a headline print of +185K and a +3.8% unemployment rate.

Average hourly earnings for all private-sector workers increased +8c last month to +$27.24.

Today’s solid report will likely keeps the Fed on track to gradually lift its benchmark interest rate.

Today’s report showed the manufacturing, construction and health-care sectors added jobs last month, while the retail and leisure and hospitality lost jobs.

Market

Markets are swinging in both directions following the mixed report, with S&P 500 futures now down 6 points after initially gaining. The 10-year yield has backed up to +3.233% from +3.196% and the dollar also remains better bid across the board.

Canada added more jobs than expected in September, as a sharp rebound in part-time hiring pushed the unemployment rate down to +5.9%.

The economy added a net +63.3K jobs in September on a seasonally adjusted basis. Market expectations were looking for a net gain of + 25K on the month.

Canada’s jobless rate eased to +5.9%, matching market expectations.

Average hourly wages advanced +2.4% in September on a one-year basis.

After initially rallying on the release, the loonie (C$1.2930) trades close to unchanged.

ADP employment increased by 230,000 in September

Job growth surged in September to its highest level in seven months as the economy put up another show of strength, according to a report Wednesday from ADP and Moody’s Analytics.

Private companies added 230,000 more positions for the month, the best level since the 241,000 jobs added in February and well ahead of the 168,000 jobs added in August.

The total was well ahead of the 185,000 jobs expected by economists surveyed by Refinitiv (formerly Thomson Reuters).

Construction grew by 34,000 as goods-producing industries overall contributed 46,000 to the final count.

“This labor market is rip-roaring hot,” Mark Zandi, chief economist at Moody’s Analytics, told CNBC. “The risk that this economy overheats is very high, and this is one more piece of evidence of that.”

If the current pace continues, Zandi said he expects the unemployment rate to fall near 3 percent over the next year. The headline jobless rate currently is at 3.9 percent.

The ADP/Moody’s count comes two days ahead of the Labor Department’s closely watched nonfarm payrolls report. Economists also expect that report to show job growth of 185,000.

The jump came despite the disruption of Hurricane Florence, which ravaged the Carolinas and was expected to dent the jobs count. The nature of ADP’s methodology is such that it doesn’t include the storm victims because it only counts employees on payroll and doesn’t account for those displaced by temporary events.

“This overstates the case a little bit,” Zandi said. He added that the actual count could come down about 25,000 once the storm impact is considered.

Job gains were spread across industries, as services led with 184,000. Professional and business services contributed 70,000, while education and health services was next with 44,000, and trade, transportation, and utilities added 30,000. Leisure and hospitality and financial services each saw growth of 16,000.

Businesses with between 51 and 499 employees added the most by size, with 99,000 new hires. Large businesses added 75,000 while small firms contributed 56,000.

The August private payrolls count was revised up by 5,000.

The report comes at a strong time for the economy, which is coming off 4.2 percent GDP growth in the second quarter a number that could be above 4 percent for the third quarter as well. Federal Reserve Chairman Jerome Powell in a speech Tuesday characterized the economy outlook among forecasters as “remarkably positive.”

CNBC

U.S weekly jobless claims fall

The number of Americans filing for unemployment benefits unexpectedly fell last week, hitting near a 49-year low in a sign the job market remains strong.

Initial claims for state unemployment benefits fell by 3,000 to a seasonally adjusted level of 201,000 for the week ended Sept. 15, the Labor Department said on Thursday. That is the lowest level since November 1969. Data for the prior week’s claims was unrevised.

Economists polled by Reuters had forecast claims rising to 210,000 in the latest week.

The Labor Department said only claims for Hawaii were estimated last week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, declined by 2,250 to 205,750 last week, the lowest level since December 1969.

The labor market is viewed as being near or at full employment. It continues to strengthen, with nonfarm payrolls increasing by 201,000 jobs in August and annual wage growth notching its biggest gain in more than nine years. Job openings hit an all-time high of 6.9 million in July.

Though there have been reports of some companies either planning job cuts or laying off workers because of trade tensions between the United States and its major trade partners, they have been partially offset by increased hiring in the steel industry.

Economists, however, have warned of job losses if the trade tensions escalate.

Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid fell 55,000 to 1.645 million for the week ended Sept. 8, the lowest level since August 1973. The four-week moving average of the so-called continuing claims fell 20,750 to 1.691 million, the lowest level since November 1973.

CNBC

U.S weekly jobless claims drop to near 49-year low

The number of Americans filing for unemployment benefits unexpectedly fell last week, hitting its lowest level in nearly 49 years and pointing to robust labor market conditions.

Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 204,000 for the week ended Sept. 8, the lowest level since December 1969, the Labor Department said on Thursday. Data for the prior week was revised to show 2,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims rising to 210,000 in the latest week. The claims data covered last Monday’s Labor Day holiday. Claims tend to be volatile around public holidays.

The Labor Department said only claims for Maine were estimated last week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,000 last week to 208,000, also the lowest level since December 1969.

The labor market is viewed as being near or at full employment. It continues to strengthen, with nonfarm payrolls increasing by 201,000 jobs in August and annual wage growth notching its biggest gain in more than nine years. Job openings hit an all-time high of 6.9 million in July.

Help wanted jobs employment jobless claims small business

Jobless claims fell, despite ongoing trade tensions.

The Federal Reserve’s Beige Book report, which was published on Wednesday, described the labor market as “tight throughout the country, with most districts reporting widespread shortages.”

Though there have been reports of some companies either planning job cuts or laying off workers because of trade tensions between the United States and its major trade partners, they have been partially offset by increased hiring in the steel industry.

Economists, however, warn of widespread job losses if the Trump administration presses ahead with tariffs on nearly all Chinese imports. President Donald Trump last week threatened duties on another $267 billion worth of Chinese goods on top of a $200 billion tariff list that is awaiting his decision.

Washington has already slapped duties on $50 billion worth of Chinese imports, provoking retaliation from Beijing. The United States has also engaged in tit-for-tat tariffs with other trade partners, including the European Union, Canada and Mexico.

Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid dropped 15,000 to 1.70 million for the week ended Sept. 1, the lowest level since December 1973. The four-week moving average of the so-called continuing claims decreased 8,250 to 1.71 million, the lowest level since November 1973.

CNBC

U.S unemployment insurance weekly claims

In the week ending August 4, the advance figure for seasonally adjusted initial claims was 213,000, a decrease of 6,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 218,000 to 219,000. The 4-week moving average was 214,250, a decrease of 500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 214,500 to 214,750.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending July 28, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 28 was 1,755,000, an increase of 29,000 from the previous week’s revised level. The previous week’s level was revised up 2,000 from 1,724,000 to 1,726,000. The 4-week moving average was 1,745,250, an increase of 3,000 from the previous week’s revised average. The previous week’s average was revised up by 500 from 1,741,750 to 1,742,250.

Read more Department of Labor

AUD/USD edges higher as retail sales beat estimate

Aussie edges higher as retail sales beat estimate

AUD/USD is trading marginally up on the day after Australia’s retail sales came in higher than expected in June. Sales rose 0.4% m/m, matching the expansion seen in May and higher than the +0.3% economists had predicted. With June data now available, the summary for the second quarter is complete and registered a 1.2% increase quarter-on-quarter, also higher than the 0.8% forecast, which could bode well for Q2 GDP, though this is not due to be released until September 4. AUD/USD had a knee-jerk reaction higher, but not aggressively so, reaching an intra-day high of 0.7373, as the US dollar retained its bid tone it had acquired in the NY session.

AUD/USD Hourly Chart

Source: Oanda fxTRade

Other currency pairs were equally confined to tight ranges. USD/JPY slid 0.01% as the Nikkei225 trimmed 0.57% off the index. GBP continued its weaker bias after the Bank of England’s dovish hike late yesterday, sliding to a two-week low of 1.3005 though notably still holding above the 1.3000 handle.

GBP Dives on Dovish BoE Hike

Yuan continues to reflect trade tensions

The People’s Bank of China fixed the yuan weaker by 0.6% against the US dollar today after headlines about China’s intention to retaliate against Trump’s musings to increase the tariff on the next $200 billion of Chinese goods to 25% from 10% hit the wires yesterday. In intraday trading, USD/CNH hit a new recent high of 6.8970, the highest since May 2017.

Today’s data slate included China’s Caixin Services PMI for July which showed a dip to 52.8 from 53.9 the previous month and well below forecasts of 53.7.

Monthly payrolls lottery on tap

Trading was understandably muted in Asia will all eyes on the release of July US nonfarm payrolls later today. Latest surveys suggest the US added 190,000 jobs in July, less than the 213.000 recorded in June and below the six-month moving average of 215,000. Related data is expected to show unemployment easing off to 3.9% after last month’s unexpected surge to 4.0% while average hourly earnings are seen rising 0.3% m/m, a faster pace than in June.

Dollar Awaits Jobs Report Amid Trade Uncertainty

Other data includes services PMI reading from across Europe, Eurozone retail sales and Canada’s trade data for June.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

Have a great weekend.

US weekly jobless claims rebound from near 45-year lows

The number of Americans filing for unemployment benefits rebounded from a nearly 45-year low last week, but remained below a level that is associated with a tightening labor market.

Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 230,000 for the week ended Feb. 10, the Labor Department said on Thursday. Claims for the prior week were revised to show 2,000 more applications received than previously reported.

Claims fell to 216,000 in mid-January, which was the lowest level since January 1973. Economists polled by Reuters had forecast claims rising to 230,000 in the latest week.

Last week marked the 154th straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was much smaller.

The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent. The tighter labor market is starting to exert upward pressure on wage growth, which will over time add to inflation pressures.

The Labor Department said claims for Maine were estimated last week. It also said claims-taking procedures in Puerto Rico and the Virgin Islands had still not returned to normal, months after the territories were slammed by Hurricanes Irma and Maria.

Last week, the four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 3,500 to 228,500.

The claims report also showed the number of people receiving benefits after an initial week of aid increased 15,000 to 1.94 million in the week ended Feb. 3. The four-week moving average of the so-called continuing claims fell 5,750 to 1.94 million.

CNBC.com

By the numbers: U.S January NFP fallout

  • Non-farm payrolls: +200k vs. +148k prev.
  • Private payrolls: +196k vs. prev. +146k)
  • Manufacturing payrolls: +15k vs. prev. +25k
  • Unemployment rate: +4.1% vs. prev. +4.1%
  • Average hourly earnings: +0.34% m/m, +2.9% y/y vs. prev. +0.4% m/m, +2.7% y/y
  • Workweek hours: 34.3 vs. prev. 34.5 – -0.2
  • U.S 10-year yield: +2.83%
  • U.S employers added +200,000 jobs in January (employers added an average of +181k a month in 2017).

    Construction, manufacturing and restaurants had strong job growth, while Government payrolls grew by +4k last month.

    Strong back-month revisions for average hourly earning and headline job prints – Dec payrolls revised to +160k and Nov revised to +216k

    Average hourly earnings rose +0.34% from Dec following an upwardly revised +0.4% gain. Year-over-year, it was +2.9% compared with projections for a +2.6% increase. December’s gain was revised upward to +2.7%.

    USD (€1.2455, £1.4165, ¥110.33, C$1.2361) is better bid across the board, while the 10-year yield has backed up to +2.834% as wage growth is starting to accelerate.