Friday's US jobs report could spark big stock market wobble

It's looking a fairly quiet day in the UK company diary

Wincanton Plc -

As the first Friday of the new month, it's time the market turns its attention towards the latest US jobs report.

Monthly increases in new jobs have been getting smaller in recent months, prompting some economists to argue the US labour market and US economy are stalling a bit, perhaps as a result of fresh local COVID flare-ups and lockdowns.

Friday's number "should be interesting", says Russ Mould, investment director at AJ Bell, with a disappointing number potentially sparking another stock market wobble.

"With no sign of any follow-up fiscal stimulus package from Washington DC, despite multiple calls from the Federal Reserve, markets will be concerned that the US recovery may stall," said Jeffrey Halley, market analyst at Oanda.

"A poor number on Friday will amplify those fears and could set markets up for a weak finish to the week."

Since April's loss of 20.8mln jobs was recorded, with an unemployment rate of 14.7%, the US economy has clawed back 10.6mln jobs in the next four months, although the pace of recovery has been slowing.

August’s initial reading came in at 1.37mln new jobs, with the unemployment rate dropping to 8.4% from 10.2% in July.

The consensus forecast for September's non-farm payrolls is 850K, with the unemployment rate easing to 8.2%.  

For deeper nuance, Mould pointed out that while the headline US unemployment official headline rate is 8.4%, the U6 rate, which covers not just unemployed workers but those who are working part-time when they would like a full-time job as well as so-called discouraged workers who have ceased to look for a post, is gathering increased amounts of attention, falling from 22.8% in April to 16.5% in July and 14.2% in August.

This may be a better indication of how many Americans are on the breadline and struggling to make ends meet, Mould said.

Significant announcements expected on Friday 2 October:

Trading announcementsWincanton Plc (LON:WIN)

Economic data: US non-farm payrolls, US unemployment, US Michigan consumer sentiment

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