Will today’s unemployment data confirm or deny the emerging narrative the US economy is gaining momentum? Data released in recent weeks is suggesting first quarter growth is perhaps accelerating from last quarter’s 1.0% level to 2.5% to 3.0%.
In my opinion, non-farm and private sector payrolls must increase by 200,000 and the labor participate rate must rise from today’s anemic rate of 62.7% in order to confirm the above nascent view. Moreover average hours worked and the increase in hourly earnings must be around 34.6 and 0.2%, respectively.
To remind all, January’s employment data surprised on the upside, especially relating to the wage and average hourly worked component.
The statistics are released at 8:30 and can potentially set the tone for the next several weeks of trading.
I can make an argument if the data is considerably stronger than expected equities may trade lower given it may again alter the proverbial monetary time table. However I think any decline may be short lived and any rebound may be centered in the value issues for such typically benefit in such an environment of growth exceeding expectations.
If this were too occur, it would be continuation of the trend that commenced following January’s release.
To remind all, according to JP Morgan in 2015 the difference between value and momentum growth was 55%, the greatest since at least 1980; momentum was up 32% and value was down 23%.
There is little I can write about yesterday’s market activity other than it was quiet, a welcome relief, with most awaiting today’s jobs data.
Last night the foreign markets were up. London was up 0.91%, Paris up 0.83% and Frankfurt up 0.36%. China was down 2.91%, Japan up 0.32%and Hang Sang up 1.18%.
The Dow should open little changed but his could change radically given the significance of the upcoming data. Oil is up about $0.25/barrel. The 10-year is unchanged at a 1.84% yield.
FEBRUARY UNEMPLOYMENT DATA AT 8:30
Ken Engelke
Chief Economic Strategist Managing Director
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