This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It 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. See full non-independent research disclaimer and quarterly summary.
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.