OPINION
Market Rating Before FOMC MeetingJan 31
Nonfarm payrolls will set the tone in the markets
Nonfarm payrolls data plays a key role in the discussions on the future of the asset purchase program, where the Federal Open Market Committee (FOMC) decided to reduce its pace by $15 billion in the face of inflationary pressures, pointing out that the improvement in the labor market continues at its November meeting.
In the labor statistics published by the Bureau of Labor Statistics (BoLS) of the US Department of Labor, non-farm payrolls had increased by 194k in September, well below the market expectation of 400k.
However, by October, we observed that the leading data on the leading sectors of the US economy contributed to employment. Especially in the data announced by the ISM, it was observed that the PMI indicator, which reveals the performance of the non-manufacturing sectors (services, construction) that creates the largest employment in the US economy, pointed to a very strong expansion with 66.7 points. Alsoi manufacturing PMI, which is the locomotive sector of the economy, showed that the growth continued with 60.8.
On the other hand, while the negotiations on the spending plan of US President Joe Biden, which is a part of the economic policies, signals that it will be sorted out soon, the short-term removal of the debt ceiling crisis creates optimism.
The positive effect of the recovery in household confidence on consumption behavior supports the improvement in the service sector, especially in retail. At this point, the decreasing number of cases and the vaccination campaign also contribute.
According to the data of the Conference Board (CB), a New York-based research organization; US consumer confidence index increased by 4.1 percent in October compared to the previous month and registered as 113.8 points, above the market expectations of 108.3. The index, which is positioned above the threshold 100, pointed to an increased optimism in consumer confidence.
To sum up, data set to be announced by the Department of Labor at 14:30 (GMT+2) today, the recovery in the labor market will accelerate compared to the previous month, as the improvement in the locomotive sectors of the economy continues and the reflections of the labor demand supported by the expectations. In this context, we believe non-farm payrolls will increase by around 500k. We anticipate that the unemployment rate will continue to decline moderately to 4.6 percent.
The Federal Reserve, which is in a position to guide global monetary policies, may bring forward the interest rate hike expectations as the recovery in the labor market appears to increase.
In the labor statistics published by the Bureau of Labor Statistics (BoLS) of the US Department of Labor, non-farm payrolls had increased by 194k in September, well below the market expectation of 400k.
However, by October, we observed that the leading data on the leading sectors of the US economy contributed to employment. Especially in the data announced by the ISM, it was observed that the PMI indicator, which reveals the performance of the non-manufacturing sectors (services, construction) that creates the largest employment in the US economy, pointed to a very strong expansion with 66.7 points. Alsoi manufacturing PMI, which is the locomotive sector of the economy, showed that the growth continued with 60.8.
On the other hand, while the negotiations on the spending plan of US President Joe Biden, which is a part of the economic policies, signals that it will be sorted out soon, the short-term removal of the debt ceiling crisis creates optimism.
The positive effect of the recovery in household confidence on consumption behavior supports the improvement in the service sector, especially in retail. At this point, the decreasing number of cases and the vaccination campaign also contribute.
According to the data of the Conference Board (CB), a New York-based research organization; US consumer confidence index increased by 4.1 percent in October compared to the previous month and registered as 113.8 points, above the market expectations of 108.3. The index, which is positioned above the threshold 100, pointed to an increased optimism in consumer confidence.
To sum up, data set to be announced by the Department of Labor at 14:30 (GMT+2) today, the recovery in the labor market will accelerate compared to the previous month, as the improvement in the locomotive sectors of the economy continues and the reflections of the labor demand supported by the expectations. In this context, we believe non-farm payrolls will increase by around 500k. We anticipate that the unemployment rate will continue to decline moderately to 4.6 percent.
The Federal Reserve, which is in a position to guide global monetary policies, may bring forward the interest rate hike expectations as the recovery in the labor market appears to increase.
