MACRO 3 minutes to read

Another blast of disappointing US data

Christopher Dembik

Head of Macro Analysis, Saxo Bank Group

Summary:  The ADP job report confirms that the US labour market has peaked and this, together with a recent run of other gloomier data, means the Fed will likely be more cautious next year.


The numbers

We got another interesting data print today about the US labour market – the ADP payroll report for the month of November. Job creations reached 179k vs 195k expected and prior at 227k. This disappointing data seem to confirm that the job market remains strong but has certainly peaked. 

The big picture 

The American employment picture continues to be strong, with the official US government report on November payrolls due on Friday. Most of the data in October were quite encouraging. The unemployment rate fell to 3.7% and the broad unemployment measure U-6 felt dipped to a pre-crisis low of 7.4%. In addition, the 3-month moving average nominal hourly earnings growth rate was at 2.96% YoY, which tends to confirm that earnings are finally catching up with their pre-crisis trend.

The only worrying data is the low level of the labour force participation rate, which has been stuck in a narrow range between 62.5% and 63% over the past few years. The data that will be released on Friday won’t be a game changer and should, finally, attract little attention from investors. We think that the Federal Reserve will remain on a dovish stance in 2019 due to a gloomier picture in US housing and the negative impact of global trade. The pressing question whether this will mean one or two rate hikes next year.

Enlarge

Access both platforms from your single Saxo account.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)