Stocks around the world rebounded before the US jobs report, buy USD/JPY?
Based on compelling evidence in September suggesting that Hurricane Florence indeed was the main factor behind a tepid payroll print, we expect data released later tonight to show a hiring rebound.
- This commonly occurs in the aftermath of major hurricanes due to recovery efforts.
- The US economy is growing well above its potential rate at the moment, and this is the key reason why hiring gains have been so robust in 2018.
- Unemployment rate has declined in three of the last four years during the month of October. We expect the rate to fall further in the fourth quarter, to a year-end level of 3.6%.
- The main takeaway from the ADP report is the widespread strength across industries. The recent deterioration in a broad range of housing indicators does not seem to have impacted hiring in the construction industry. Meanwhile, the trade war did not appear to have affected manufacturers’ hiring decisions.
- The 227,000 private-sector jobs added in October’s ADP report came in above the median at 187,000. Private-sector hiring momentum is building, with the 3-, 6- and 12-month moving averages improving in the last few months.
- All in all, we expect Friday’s report to confirm the continued solid performance of the US economy, as well as its growing lead over most of the other advanced countries.
Fullerton Markets Research Team
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