Very quick here
The initial jobless claims number released this morning of 712,000 was well below expectations for 775,000. And it was also well below last week's upwardly revised figure of 787,000.
That's very good news. But it is just one week's data. And it is also data that will have been greatly affected by the Thanksgiving holiday. So, unfortunately we can't read too much into the data release. My base case is still for a double dip in the US, with rising initial claims a principal cause.
In the meantime, let's see what tomorrow's jobs numbers bring. ADP said that we had 307,000 private sector jobs added to the economy in the month through mid-November. And while that was the lowest in four months and below expectations, it was still 300,000 new jobs, a robust figure in most other situations.
The numbers I am seeing regarding expectations for tomorrow are as follows:
Non-farm payrolls of 469,000 vs 638,000 in October
Private non-farm payrolls of 589,000 vs 906,000 in October
Unemployment rate of 6.8, down from 6.9% in October
Average hourly earnings (yoy) 4.3%, down slightly from 4.5% in October
I have seen numbers as low as a -250,000 for tomorrow's payrolls. So, even a 400,000 number and 7.0% unemployment are close enough to keep people in a moderately bullish mindset on Wall Street. If we see something close to zero, I think bond markets will rally.
There's a wide dispersion of potential outcomes for this number so it can go a lot of different ways. Going forward, watch the Covid-19 hospitalization numbers. They will be the key driver of government-mandated economic rollbacks that cause jobless claims and unemployment to increase.
Well, given how screwed up the claims numbers apparently are, it's kind of hard to really know where that trend is going. The continuing claims number mostly aligns with the employment picture, but again, because the UE rate is from the household survey, guessing on that is not easy. With employment 10mil under the peak pre-covid, the 7% UE rate is way too low, but that is simply due to the sharp drop in participation. Without that, we'd be around 10% UE. It is likely now that more schools are going virtual, and more people are avoiding being in public, that participation has dropped again, so we might see the jobless rate fall even with no net job gains or a slight decline. 2020 is the year of messed up data (just wait til we have a look at the Census next year!)