US October employment report: a green light for the Fed’s liftoff in December…<\/p>\n
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Sign up for our free newsletter to receive weekly news from BONDWorld. Click here to register for your free copy<\/strong><\/span><\/a> <\/strong><\/span><\/a><\/span><\/p>\n Intesa Sanpaolo – Research Department For professional investors and advisers only<\/strong><\/p>\n – –<\/span>First signs of a stabilisation of the Chinese economy?<\/p>\n – – <\/span>European macroeconomic data mixed.<\/p>\n – The European Commission expects several countries to be non compliant with fiscal rules in 2016.<\/p>\n – The October Employment Report is full of positive surprises: there are no hidden flaws, all indicators are clearly upbeat and testify to continuing, solid improvement of the labor market.<\/p>\n Non-farm payrolls increase by 271k, and the previous 2 months’ numbers are revised up by 12k. The 3m average change, at 187k, is solid, even though somewhat below the yearly average, 206k. Employment growth is widespread and accelerating in private services (+241k) and construction (+31k), stable in manufacturing, marginally positive in the public sector (3k).<\/p>\n Diffusion indices are high (1m at 61.8, 3m at 59.7, 6m at 65.6) showing that employment is growing in a large fraction of industries. Employment growth in the (volatile) household survey is up by 320k; the participation rate is stable at 62.4%, although the labor force is up by 313k. The unemployment rate is down at 5% from 5.1% (low since 04\/2008); the underemployment rate falls to 9.8%, minimum since May 2008, with a large decrease in parttimers for economic reasons. Hours worked are up by 0.3% m\/m, pointing to a rebound in industrial production. The employment rate is mildly higher, at 59.3%. Hourly wages increase by 0.4% m\/m, after a flat reading in September. This is the 6th year of expansion, and employment is still growing just short of 200 k per month, with unemployment falling and some signs of wage acceleration: this is clearly a green light for the Fed’s liftoff in December.<\/p>\n The October round of survey data brought the first signs of an improvement of the Chinese economy: manufacturing PMI up, albeit still weak, driven by foreign orders, and a stronger rise of the services PMI. Although it is unwise to place too much trust in a single set of monthly data, the indication is compatible with the view that the situation has improved in the closing months of the year, also thanks to the overcoming of distortions tied to national festivities. In the next few days, initial September data on foreign trade will be released, and should at least outline a further easing of the weakness that was still evident over the previous months. On the whole, the global manufacturing PMI has risen back from 50.7 to 51.4, reabsorbing approximately half of the decline incurred since the autumn of 2014. Considering that the economic policy reaction is still under way in China, there is no reason to doubt the scenario by which global trade growth will re-accelerate in 2016, supported by an at least stable trend of oil prices, and by the return into positive growth territory of China’s foreign trade, albeit at a modest pace compared to past standards.<\/p>\n In the meantime, European data are mixed. On the one side, the trend of German orders and output data was negative in September, considering that the drop in output was not restricted to the capital goods segment, but also affected consumer goods. On the other side, business sentiment surveys keep outlining a stable growth picture, albeit with a shift in weight from goods to services, as also confirmed by monthly data.<\/p>\n The forecasts published yesterday by the European Commission allow for cautious optimism: GDP growth between 2015 and 2016 is still expected to accelerate, albeit modestly (from 1.6% to 1.8%). The prickly aspect of the Commission’s estimates is the credibility of fiscal rules: under current legislation, the structural balance would worsen further in Spain (from -2.5 to -2.6%) and in Italy (from -1.0 to -1.5%), and improve by only 0.3% in France (from -2.7% to -2.4%). On the other hand, the European authorities face the risk of further destabilising a shaky political setup of the Union should they impose respect of the fiscal rules. Moderates have been punished in Greece and Portugal, the Finnish government is on the verge of a crisis, political elections will be held in December in Spain, and in Italy a round of local elections with important implications for the government will be held in the spring of 2016.<\/p>\n Appendix Important Disclosures<\/strong> Quelle: BONDWorld.ch<\/p>\n","protected":false},"excerpt":{"rendered":" US October employment report: a green light for the Fed’s liftoff in December…<\/p>\n","protected":false},"author":2,"featured_media":3649,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"telegram_tosend":false,"telegram_tosend_message":"","telegram_tosend_target":0,"footnotes":"","_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[50],"tags":[],"class_list":["post-1796","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-weekly-analysis"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1796","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/comments?post=1796"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1796\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media\/3649"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=1796"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=1796"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=1796"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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