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5 Dec 2014
Soft underlying data adds uncertainty over payrolls outcome – ING
FXStreet (Barcelona) - The ING Research Team notes that underlying data in the US have been a bit softer of late, whether payrolls go the same way is still a coin-toss.
Key Quotes
“Over recent months, any attempts to be clever forecasting an above or below consensus payrolls figure have usually met with disappointment. The payrolls number has been unusually steady, and close to the three-month moving average, which by default when data is hard to forecast, becomes most forecasters’ estimates.”
“Yet once again, the underlying data is telling us that the labour market picture has subtly changed, and has been softer than in recent months. Initial jobless claims, not regarded these days as a great month-on-month indicator for payrolls, but a reliable longer term predictor of trends, has been rising recently. Not good news for payrolls. And both the employment indices of the recent ISM surveys were slightly lower this month than last.”
“The ADP survey – the most reliable (yet still very unreliable) indicator of month-on-month payrolls – also dipped this month, and the conference board measure of “jobs plentiful minus jobs hard to get” also took a turn for the worse.”
“It looks a fairly clear case for pitching the forecast a little below the three-month moving average, and therefore below the consensus view, and preparing for a bond positive and USD negative release.”
“However, despite the broad agreement by other labour market data, payrolls is a strange and unpredictable beast, and there is no guarantee that this is what will happen, or that the unemployment rate, will remain unchanged this month.”
Key Quotes
“Over recent months, any attempts to be clever forecasting an above or below consensus payrolls figure have usually met with disappointment. The payrolls number has been unusually steady, and close to the three-month moving average, which by default when data is hard to forecast, becomes most forecasters’ estimates.”
“Yet once again, the underlying data is telling us that the labour market picture has subtly changed, and has been softer than in recent months. Initial jobless claims, not regarded these days as a great month-on-month indicator for payrolls, but a reliable longer term predictor of trends, has been rising recently. Not good news for payrolls. And both the employment indices of the recent ISM surveys were slightly lower this month than last.”
“The ADP survey – the most reliable (yet still very unreliable) indicator of month-on-month payrolls – also dipped this month, and the conference board measure of “jobs plentiful minus jobs hard to get” also took a turn for the worse.”
“It looks a fairly clear case for pitching the forecast a little below the three-month moving average, and therefore below the consensus view, and preparing for a bond positive and USD negative release.”
“However, despite the broad agreement by other labour market data, payrolls is a strange and unpredictable beast, and there is no guarantee that this is what will happen, or that the unemployment rate, will remain unchanged this month.”