Week ahead: Let’s talk about the US jobs market

Week Ahead

Nonfarm payrolls are the week’s big release as the US looks to keep the good vibes going in the labour market. The latest Canadian monthly GDP stats come too on the data front. Meanwhile, OPEC-JMMC meets at an interesting time for crude oil markets. 

Can November’s nonfarm payrolls keep up the momentum? 

At the time of writing, the US Bureau of Labour Statistics is carefully collating the nation’s job creation stats for November, ready for publishing on December 3rd. 

Once more, this latest jobs report is coming off the back of a hot printing from the month before. October’s stats, published in November, revealed 531,000 new roles were added to the US economy that month. Job creation beat the Dow estimate of 450,000. 

We saw some good increases in key labour metrics alongside the raw job numbers in November too. The unemployment rate fell to a pandemic-era low of 4.6%. Wages rose by 0.4% and are now up 4.9% on a year-by-year basis. 

The good news doesn’t stop coming. August and September’s numbers were revised upwards following much lower-than-expected prints. August final reading came to 483,000 new roles created while September gained 314,000 roles after an initial 194,000 estimate. Higher frequency data is also encouraging: last week’s initial jobless claims total fell to 199,000, the lowest since 1969. 

Jobs data can be lumpy, though. July added over one million new jobs, and reports since then have all failed to meet expectations. This has led to some short-term volatility around US yields and the US dollar upon release. 

Nonfarm payrolls are a key metric of economic health and one that the Fed watches very closely. Chair Jerome Powell, who will be staying put as the Fed’s head honcho, has always said the US labour market still has more to give. Will it come with November’s data?  

OPEC-JMMC meets amidst a tricky oil market 

A new set of OPEC-JMMC talks kick off on Thursday as the cartel meets for the final time in 2021. 

On the agenda no doubt will be whether to raise production volumes further or stick with the current 400,000 bpd monthly increase. OPEC+ has committed to that output level until April 2022 at the earliest. The decision last week by the US and several other countries to release strategic reserves into the market could also see OPEC+ reduce the planned increase in oil output. 

Oil markets are in a bit of a sticky position at the moment. While they are back in the green at the time of writing, the WTI and Brent benchmarks have been having a relatively tough time at present. 

Part of the reason for dropping oil prices is rising global COVID-19 cases. Some major economies in Europe, including The Netherlands, Germany, and Austria, have reimposed new lockdowns. Even China, who allegedly reached zero-COVID status earlier in the year, is struggling to contain new Delta variant outbreaks. 

We saw a winter case spike around the world last winter. That fed into lower crude oil demand, although OPEC+ began its production increases soon after the turn of the new year. If cases continue to grow, then oil demand will likely drop with them. 

Prices are lower right now, but whether it’s due to US pressure it’s hard to say. I think COVID is the most likely culprit. 

US agitation may even go further. There are rumours circulating that the long dormant No Oil Producing and Exporting Cartels Act (NOPEC) could start being discussed. It’s not ever really likely to enter law, but if it did it would give the United States the power to essentially sue OPEC+ for perceived market manipulation and price controls. Seems a bit odd really. That’s kind of OPEC’s role. 

OPEC+ members pumped less oil in October than expected – some 217,000 bpd extra. A sign of lower demand? Possibly. It could also be a response to overproduction from September when the cartel’s members pumped out 650,000 bpd. 

OPEC does have a lot on its plate, but there’s talk of the cartel fighting fire with fire. It may slow its production increases in line with COVID-induced lower demand. This next meeting is crucial for setting the 2022 tone. 

Canadian GDP in focus 

On the data side, we’re also due the latest month-on-month GDP figures for Canada this week. 

Due to the way Canada reports, this should be for September. The previous report disappointed. There is discontent brewing in the Great White North as economic recovery appears sluggish. 

The Bank of Canada said in a statement published in late October: “The economic recovery hit another snag in August with industry-level GDP rising by 0.4% m/m. In isolation, this would be considered a relatively robust print, but markets had been expecting something considerably stronger (+0.7%), and flash estimates for September adding to the disappointment with Statistics Canada projecting a flat print.” 

“With the flat flash estimate for September, Statistics Canada is projecting an unannualized gain of 0.5% for Q3 GDP (so call it roughly 2.0% annualized). We had been looking for Q3 growth in the mid-to-low 3s, while the BoC had forecast Q3 growth at 5.5% in its most recent MPR. Following today’s report, we now look for 2021 GDP growth of about 4.7%, compared to the BoC’s forecast of 5.1% growth.”  

 

Major economic data 

Date  Time (GMT)  Asset  Event 
Mon 29-Nov  Tentative  JPY  BOJ Gov Kuroda Speaks 
  3:00pm  USD  Pending Home Sales m/m 
       
Tue 30-Nov  1:00am  CNY  Manufacturing PMI 
  8:00am  CHF  KOF Economic Barometer 
  1:30pm  CAD  GDP m/m 
  2:45pm  USD  Chicago PMI 
  3:00pm  USD  CB Consumer Confidence 
       
Wed 01-Dec  12:30am  AUD  GDP q/q 
  1:15pm  USD  ADP Non-Farm Employment Change 
  1:30pm  CAD  Building Permits m/m 
  3:00pm  USD  ISM Manufacturing PMI 
  3:30pm  OIL  US Crude Oil Inventories 
       
Thu 02-Dec  8:00am  EUR  Spanish Unemployment Change 
  All Day  All  OPEC-JMMC Meetings 
  1:30pm  USD  Unemployment Claims 
  3:30pm  GAS  US Natural Gas Inventories 
       
Fri 03-Dec  1:30pm  CAD  Employment Change 
  1:30pm  CAD  Unemployment Rate 
  1:30pm  USD  Average Hourly Earnings m/m 
  1:30pm  USD  Non-Farm Employment Change 
  1:30pm  USD  Unemployment Rate 
  3:00pm  USD  ISM Services PMI 

 

Key earnings data 

Wed 1 Dec  Thu 2 Dec  Fri 3 Dec 
  CrowdStrike Holdings (CRWD) AMC  Asana (ASAN) AMC 
Salesforce.com (CRM) AMC     
  Snowflake (SNOW) AMC  DocuSign (DOCU) AMC