Recent economic indicators from the United States suggest a mixed but generally positive outlook for the job market. As we navigate early 2016, let’s take a closer look at the latest developments:
- ● Applications for unemployment benefits in the US saw a decline last week | Bloomberg
- ● Job cuts in the US for December fell to their lowest level in 15 years, according to Challenger | CNBC
- ● The percentage of US adults employed full-time rose to 45.3% in December | Gallup
- ● Consumer confidence in the US has reached a 12-week high | Bloomberg
- ● German industrial production unexpectedly declined in November | MNI
- ● Is the US capable of remaining a bastion of stability in the global economy? | NY Times
- ● Chinese stock markets observed gains on Friday | Reuters
Private nonfarm payrolls in the US are expected to grow by 214,000 (seasonally adjusted) based on The Capital Spectator’s aggregated forecasts for the December report from the Labor Department. This figure indicates a moderate increase compared to last month’s statistics.
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An overall bearish sentiment has begun to affect US stock markets in the early days of 2016. However, today’s jobless claims figures provide a more optimistic update about the employment landscape. The outplacement firm Challenger, Gray & Christmas has reported that layoffs in December were the fewest since 2000. This positive information follows yesterday’s encouraging estimate on private payrolls for December from ADP. Together, these statistics indicate a potentially strong official employment report tomorrow from Washington.
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Financial analyst Dennis Gartman believes the bear market has commenced. Similarly, UBS strategists identify a heightened risk of a bear market emerging. This pessimistic outlook is supported by a Hidden Markov model (HMM), which has consistently tracked market regime shifts reliably.
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● The US private sector added the highest number of jobs in a year during December, according to ADP | Reuters
● The growth of the US services sector decelerated in December | USN&WR
● US factory orders fell by 0.2% in November | MarketWatch
● Job creation in the US was robust but saw a slight decline at the end of 2015 | Gallup
● The US foreign trade deficit narrowed in November | ABA
● The World Bank has reduced its global growth forecasts | Bloomberg
● Stock trading in China was halted abruptly following a 7% drop | CNN
● Global Composite PMI indicates a slowdown in growth as emerging markets continue to struggle | Markit
The pace of hiring at US companies increased in December, as highlighted in the ADP Employment Report. Private payrolls rose by 257,000 in December on a seasonally adjusted basis, significantly exceeding consensus forecasts and marking the strongest gain in a year. This encouraging news comes as a refreshing change following several days of less favorable economic reports.
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The Atlanta Fed’s renowned GDPNow model has started the new year with a significant downward revision of fourth-quarter growth expectations. Deutsche Bank also expressed bearish sentiments recently. Adding to this feeling of gloom are the latest data on December auto sales and a string of disappointing manufacturing figures from the end of 2015. As we assess the potential for US growth, the upcoming ADP Employment Report for December may provide essential insights.
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● US auto sales experienced a sharp decline in December, although the total for 2015 set a new record | Reuters
● Eurozone economic growth reached a 4.5-year high in Q4 of 2015 | Markit
● The Caixin China Composite PMI fell below the neutral 50 mark in December | Markit
● Global economic concerns rise due to fears of a slowdown in China | Bloomberg
● North Korea has claimed it successfully conducted a hydrogen bomb test | WaPo
The ADP Employment Report for December is anticipated to show a rise of 212,000 (seasonally adjusted) private nonfarm payrolls compared to the previous month, reflecting a slight decrease from November’s figures.
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In December, the expected risk premium for the Global Market Index (GMI) continued to decline. The GMI, an unmanaged, market-value-weighted blend of the major asset classes, is forecasted to deliver an annualized 2.9% return over the “risk-free” rate in the long term—markedly lower than what has been seen in recent years. The latest estimate, based on data from last month, represents a notable 40 basis points decrease compared to the previous month’s calculation.
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Overall, the recent reports present a promising yet cautious picture of the US economy. With a steady increase in employment and a decline in layoffs, the workforce appears to be stabilizing. However, challenges remain on the global stage, particularly concerning key economic partners. As we continue to monitor these trends, it is crucial to remain informed about shifts in the landscape that could impact the economy and labor market.
