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US Jobs Details Better than the Headline

United States

The dollar and US yields are recouping more of yesterday’s decline. A break of $1.0480-$1.05 would suggest the euro’s upside bounce is exhausted. A dollar move above JPY116.80-JPY117.25 would also hint that the greenback was going to make an other run toward JPY118.30-JPY118.60. Sterling support is seen in the $1.2285-$1.2310 area. The Canadian dollar is struggle to sustain it upward momentum. A US dollar back above CAD1.3250 would solidify the low near CAD1.32.00.

 

The US created a net new 156k jobs in December, which was slightly disappointing.
The 17k upward revision to October and November series offset the headline miss. Manufacturing add 17k jobs. This is the most since January.

U.S. Nonfarm Payrolls, December 2016

(see more posts on U.S. Nonfarm Payrolls, )
U.S. Nonfarm Payrolls, December 2016

Source: Investing.com - Click to enlarge

Unemployment Rate

Although the underemployment rate eased to 9.2%, an new cyclical low, the more watched U-3 measure rose to 4.7% as expected, from 4.6%.

 

U.S. Underemployment (U6), December 2016

(see more posts on U.S. Underemployment U6, )
U.S. Underemployment (U6), December 2016

Source: Investing.com - Click to enlarge

Participation Rate

The participation rate ticked up to 62.7% from a revised 62.6% (initially 62.7%).

 

U.S. Participation Rate, December 2016

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Source: Investing.com - Click to enlarge

Average Weekly Earings

The average work week slipped unexpectedly. However, most the rest of the jobs report was constructive.

On average the US lost 4k manufacturing jobs a month in 2016, after gaining 2k manufacturing jobs a month in 2015.

Before the report, we suggested that hourly earnings may be the most important component.  It rose 0.4% for new cyclical high year-over-year pace of 2.9% (which is the fastest pace since 2009). Looking ahead to January, there is risk that earnings growth slows. Last January average hourly earnings rose 0.5%, which is the second highest since the financial crisis.  Minimum wage was lifted at the start of the year in 19 states, but the impact on the national figures will likely be negligible.

U.S. Average Hourly Earnings, December 2016

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U.S. Average Hourly Earnings, December 2016

Source: macro.economicblogs.org - Click to enlarge

Canada Employment Change

Canada’s jobs report was stronger. It created 81.3k full-time jobs. In proportionate terms, this is as if the US created 800k jobs.
Canada also surprised by reporting a November trade surplus of CAD0.53 bln. Economists had expect that the deficit grew to CAD1.6 bln from CAD1.0 bln. The US trade deficit was in line with expectations at $45.2 bln.

 

Canada Employment Change, December 2016

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Source: Investing.com - Click to enlarge

Canada Unemployment Rate

The unemployment rate ticked up to 6.9% from 6.8%.

Canada Unemployment Rate, December 2016

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Source: Investing.com - Click to enlarge

Canada Participation Rate

The Canadian participation is nearly three percent higher than the American one. On the other side, Canadian unemployment is two percent higher.

The participation rate rose to 65.8% from 65.6%.

Canada Participation Rate, December 2016

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Source: Investing.com - Click to enlarge

 

Full story here
Marc Chandler
He is Global Head of Currency Strategy of Brown Brothers Harriman (BBH). He has been covering the global capital markets in one fashion or another for 25 years, working at economic consulting firms and global investment banks. He regularly appears on CNBC and has spoken for the Foreign Policy Association. In addition to being quoted in the financial press daily, Chandler has been published in the Financial Times, Foreign Affairs, and the Washington Post. BBH provides specialist services and innovative solutions to many Swiss asset managers that include a global custody network of close to 100 markets, accounting, administration, securities lending, foreign exchange, cash management and brokerage services. Feel free to contact the Zurich office of BBH
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