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Friday’s jobs report will be the subject of much speculation within the trading community, with the figures pored over for any sign that the US is more or less able to withstand a rate rise in 2016. At a time when political uncertainty is rife, there are mixed messages going into this release, with the potential for firms to ease off hiring with such a cloud looming over the economic future of the US. By and large, as US unemployment falls, so the expectations gradually fall for the payrolls number as the improvements become more marginal. With that in mind, the ability to post circa 180,000 jobs for the forthcoming months would by and large be perceived as sufficient for a December rate rise. However, the big question is whether we will indeed see such a jobs market as we move into the forthcoming months.
There are a number of different avenues to explore as a means of ascertaining what the payrolls number might look at. PMI surveys form one such source, with ISM and Markit providing employment breakdowns which can tell us something about where the NFP figure could go this month.
Below we can see the data from Markit, which shows a deterioration in the services employment index, highlighting the potential for services jobs to flounder this month. Historically we can see a clear correlation between the payrolls numbers and the employment index.