Friday, December 5, 2014

Our Nov. '14 NFP change guesstimate is +175K ...

For the third month in a row, we are submitting our NFP change guesstimate a bit late, but certainly more than a few hours before BLS releases that figure.  

We expect approx. 175K jobs to have been added during Nov. '14.  Our estimate is below the 230K consensus.  Regional Fed surveys were mixed, both ISM surveys were slightly weaker than the prior month, initial jobless claims went up a bit, and we think the positive impact of the mid-term elections declined a bit.  Online job ads increased nicely during the month, which could be a positive sign more for Dec. than Nov.  

Lastly, we would focus on whether or not there has been wage growth.  In our opinion, wage growth needs to remain above the CPI for an extended period.  Given the recent decline in oil prices (which we discussed last week), we think wage growth and inflation become even more important to track.  In our opinion, if wage growth stagnates again, when compared with CPI, then look for lower oil prices to have more of an impact (a positive one) on consumer staples rather than cyclicals.  Wage growth stagnation could also indicate that companies remain uncertain about the future, and although they may be hiring more, they are discounting that uncertainty risk by not increasing wages and salaries.  Continuing growth in temp positions could indicate the same thing.

Again, our Nov. '14 NFP change estimate is +175K.  BLS will release NFP change on Friday (12/5) at 8:30am ET. 

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