JOBS DATA AT 8:30 AM

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By: Kent Engelke | Capitol Securities

At 8:30 am, March’s employment data will be released. Even though last week’s weekly jobless claims is not in the reference period, claims fell to a five week low and had the largest decline since April 2015. Moreover claims are hovering at levels last experienced in the early 1970s.

As with past BLS reports, I will focus on three components; the labor participation rate (LPR), hours worked and increased average hourly earnings.

There is a disconnect between the LPR and weekly jobless claims as each are suggesting different conclusions. The LPR is around lows last experienced in the mid-1970s, thus suggesting considerable slack while jobless claims is suggesting considerable tightness. I will argue there is considerable slackness given anemic wage gains and hours worked.

With the above written, however, I believe the labor report will be the catalyst that enables a 3% growth rate, job growth in small and medium sized businesses. As noted many times, 90% of the job growth from 1996-2007 was from companies employing less than 400 people.

Analysts are expecting a 180k and 170k increase in non-farm and private sector payrolls, respectively, a 4.7% unemployment rate, a 0.2% increase in average hourly earnings, a 34.4 hour work week and a 63.0% LPR.

Today is also the conclusion of the two day meeting between President Trump and his Chinese counterpart. Will there be any headline making statements?

Commenting upon yesterday’s market action, equities ended quietly higher while Treasuries slipped on the Fed’s intention to shrink its balance sheet. Oil ended at a monthly high. At the end of trading there were headlines about possible US reprisals to North Korea and Syria. Will escalating geopolitical tensions begin to impact trading?

Last night the foreign markets were mixed. London was up 0.20%, Paris was up 0.1% and Frankfurt was down 0.29%. China was up 0.17%, Japan was up 0.36% and Hang Sang was down 0.03%.

The Dow should open flat, but this could change radically given the significance of the 8:30 am data. Futures rebounded following the US cruise missile strike on Syria. The 10-year is up 7/32 to yield 2.32%. Crude is up about 1%.

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