OPINION
Market Rating Before FOMC MeetingJan 31
The Last Employment Report of 2021 is on the way
Labor statistics will be announced today at 15:30 (GMT+2) by the US Department of Labor. In the data set, nonfarm payrolls will play a significant role on the asset prices worldwide.
Last month, the Bureau of Labor Statistics (BoLS) data showed that nonfarm payrolls increased by 531 thousand, exceeding the market forecast of 450 thousand. While the unemployment rate was 4.6 percent in this period, average hourly earnings on a monthly basis increased by 0.4 percent.
The high-frequency data for the labor market covering November (in graph-1) indicate that the change in the jobless claims continues to decline moderately. Here, it is very important that the jobless claims decreased to the lowest levels of the pandemic period (199 thousand), especially in the week ending November 20.
As a result of this, in the National Employment Report prepared in cooperation with ADP Research Institute and Moody's Analytics, it is normal for private sector payrolls to increase by 534 thousand in November, supporting expectations for nonfarm sectors. In October, the increase was 571 thousand.
On the other hand, data released by the US Department of Commerce indicate that personal consumption expenditures increased by 0.6 percent on a monthly basis. November data of the Conference Board (CB), a New York-based research organization, indicate that the consumer confidence index decreased by 3.5 percent with 109.5 points.
The increase in employment from 52 to 53.3 points in the manufacturing purchasing managers’ index (PMI) published by the Institute for Supply Management (ISM) for November reveals that the demand for labor in the locomotive sector of the economy continues.
However, it is possible to say that the high number of cases in the world's largest economy has a limiting effect on the consumption behavior of households and, accordingly, creates a downside risk in terms of expansion in sectors. In the last 24 hours, the number of daily cases in the USA has been announced as 132,822, while the 7-day average is around 82,360. Also, the number of deaths per day was reported as 1,264.
To sum up, in the last labor statistics of the year, which will be announced today, we may observe a decline as a result of the continued expansion in the locomotive sectors of the economy and the reflections of the moderation in consumer spending caused by the increase in the number of cases. However, the Federal Reserve kept the federal funds target unchanged and decided to slow the pace of the asset purchase program, creating the expectation that favorable financing conditions will come to an end sooner than expected and may increase labor demand. And we believe that nonfarm payrolls, which is an indicator of the labor market, will increase around 450 thousand and the unemployment rate will continue to decline moderately to 4.5 percent.
These data sets, which may show the recovery in the labor market continues, are likely to trigger positive price movements in the dollar assets, which are already ready to go upwards following the Fed’s remarks that the Bank will consider terminating asset purchases earlier than previously expected.
Last month, the Bureau of Labor Statistics (BoLS) data showed that nonfarm payrolls increased by 531 thousand, exceeding the market forecast of 450 thousand. While the unemployment rate was 4.6 percent in this period, average hourly earnings on a monthly basis increased by 0.4 percent.
The high-frequency data for the labor market covering November (in graph-1) indicate that the change in the jobless claims continues to decline moderately. Here, it is very important that the jobless claims decreased to the lowest levels of the pandemic period (199 thousand), especially in the week ending November 20.
As a result of this, in the National Employment Report prepared in cooperation with ADP Research Institute and Moody's Analytics, it is normal for private sector payrolls to increase by 534 thousand in November, supporting expectations for nonfarm sectors. In October, the increase was 571 thousand.
On the other hand, data released by the US Department of Commerce indicate that personal consumption expenditures increased by 0.6 percent on a monthly basis. November data of the Conference Board (CB), a New York-based research organization, indicate that the consumer confidence index decreased by 3.5 percent with 109.5 points.
The increase in employment from 52 to 53.3 points in the manufacturing purchasing managers’ index (PMI) published by the Institute for Supply Management (ISM) for November reveals that the demand for labor in the locomotive sector of the economy continues.
However, it is possible to say that the high number of cases in the world's largest economy has a limiting effect on the consumption behavior of households and, accordingly, creates a downside risk in terms of expansion in sectors. In the last 24 hours, the number of daily cases in the USA has been announced as 132,822, while the 7-day average is around 82,360. Also, the number of deaths per day was reported as 1,264.
To sum up, in the last labor statistics of the year, which will be announced today, we may observe a decline as a result of the continued expansion in the locomotive sectors of the economy and the reflections of the moderation in consumer spending caused by the increase in the number of cases. However, the Federal Reserve kept the federal funds target unchanged and decided to slow the pace of the asset purchase program, creating the expectation that favorable financing conditions will come to an end sooner than expected and may increase labor demand. And we believe that nonfarm payrolls, which is an indicator of the labor market, will increase around 450 thousand and the unemployment rate will continue to decline moderately to 4.5 percent.
These data sets, which may show the recovery in the labor market continues, are likely to trigger positive price movements in the dollar assets, which are already ready to go upwards following the Fed’s remarks that the Bank will consider terminating asset purchases earlier than previously expected.
