The US non-farm payrolls report for December looked mixed, but it contained multiple surprises. The US added 199,000 non-farm
payrolls in December, not only a drop from the 210,000 jobs added in November but also far below the 807,000 jobs recorded in
the ADP private markets in December. The non-farm payrolls also missed analysts consensus estimates of 450,000 jobs. This figure
may reflect the most prosperous December in the US consumer market. The manufacturing, non-manufacturing and government jobs did
not increase, which was driven mainly by the spread of the Omicron variant in the US, suffocating the country’s economic growth
pace or even shrinking.
However, other crucial parts of the report revealed that the unemployment rate and average wages recorded satisfactory
improvements in December. The unemployment rate fell for the tenth consecutive month, from 4.1% in November to 3.9%. The
unemployment rate has now fallen close to the pre-pandemic levels. Furthermore, another positive highlight was the average
monthly growth in wages related to income and consumer spending, which increased from 0.3% in November to 0.6% in December. The
annual rate was slightly lower than the previous value but still better than expected. The data from these two sections show
that the U.S. job market and wage growth are still doing great. The two metrics have now met the threshold for interest rate
hikes set by the Fed chairman and other Fed officials. Many believe that investors are waiting for Wednesday and Friday to
confirm the latest inflation and consumption data in the United States. The two
economic data sets
will provide more guidance for the US dollar. Most importantly, whether the Fed should accelerate its balance sheet reduction
and the pace of interest rate hikes heading into next month.
Share
- Last Updated: January 10, 2022
This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.
