The first Friday of the month means its US non-farm payrolls (NFP) day – a big event for stock market watchers, even though it has become something of a hard to predict number.
November’s and December’s NFPs were very weak on the headline level, though on other measures the reports were decent.
In December, the US economy added 199k jobs, an 11-month low, and well below the 450k consensus forecast.
With the NFP figure coming in below economists’ forecasts for six of the last nine months, market analyst Marshall Gittler at BDSwiss said: “It’s clear that something major has changed with the US labour market. Economists’ forecasts are based on regression analysis of past relationships and are therefore unable to capture this new ‘something’ and predict it accurately.”
The pointy-heads do seem to be “wising up”, however, and this month the consensus forecast for an increase of only 178k new jobs.
“That would be pretty low – the lowest since January of last year. But maybe it’s all the US can do when people don’t want to work.”
As Gittler said, with the Fed already set on a tightening path, it would take a “bombshell” surprise in the figures – a fall in jobs and a rise in unemployment – to deflect the Fed from its intended course.
“Any less and they’ll stick with what they’ve determined. Of course, a blowout figure that sent the unemployment rate down below its pre-pandemic level and a big increase in participation and they might have the courage to hike by 50 bps at a time. That would be positive for the dollar.”
Significant announcements expected
Interims: Airtel Africa PLC (LSE:AAF)
Economic data: Non-Farm Payrolls (US), Unemployment Rate (US), PMI Construction (UK)