It’s the first Friday of the month – of the year, come to that – so once again focus will be on US jobs data.
Economists are expecting 424,000 new jobs to have been added to the US economy in December, although as Pantheon Macroeconomics said, forecasting the payrolls number during the pandemic “is a nightmare).
Payrolls processing firm ADP reported an 807,000 increase in private payrolls in December, which was nearly double the consensus of 410,000. The ADP data is rarely a reliable guide to non-farm payrolls but the size of the “beat” has encouraged some last-minute upward revision to forecasts.
“The 807K jump in the ADP measure of private payrolls is very supportive of our long-standing view that Friday's official numbers are likely to be much stronger than the consensus forecast, 424K. Viewed together with the Homebase numbers, which signal a 1M-plus increase in payrolls, the case for expecting the best payroll report since March is compelling, though nothing is guaranteed. Neither ADP nor the Homebase data are consistently reliable … but when they tell the same story it's unwise to ignore them,” suggested Pantheon.
The US unemployment rate, meanwhile, is expected to ease to 4.1% from November’s 4.2% while average hourly earnings are expected to be 4.2% higher than a year earlier, down from 4.8% in November.
In the UK, the Halifax House Price index for December will be released at midnight but of more interest to traders will be the 9.30am release of the UK construction purchasing managers’ index for December. Economists have pencilled in a figure of 54, which while it is down from November’s 55.5 still represents an expansion in activity (50.0 being the crossover point).
On the corporate front, there are likely to be a number of retailers publishing their Christmas trading numbers, including (possibly) Marks and Spencer Group PLC, which has lately been showing signs of the revival the market has been waiting on for some 40 years now.