Huitong Network News--September secondHolland InternationalAccording to the article, the ADP data for August were much lower than market expectations, and the ISM manufacturing employment index fell sharply in August, all of which were worrying or suggested that non-farm workers were disappointing in August. The market expects the US non-farm rise to reverse, to just 750000 in August, and the unemployment rate will fall further to 5.3 per cent. In addition, the market hopes that the average annual rate of hourly wages will stabilize at 4%.
The U.S. Bureau of Labor Statistics will release key employment data such as non-farm work and unemployment in August at 20:30 Beijing time. Dutch International said that in the past, the focus of the market was mainly on the timing of the Fed's reduction in bond purchases, but the trajectory of the US economy was equally important. The ADP data for August were well below market expectations, and the ISM manufacturing employment index fell sharply in August, suggesting that non-farm workers were disappointing in August.
The market predicts that the non-farm sector in the United States will increase by only 750000 in August, and the unemployment rate will fall to 5.3%.
The August jobs report will provide a series of key information about monetary tightening for the market and the Federal Reserve. The number of non-farm workers in the United States reached an impressive 943000 in July, the biggest increase in employment in 11 months, representing the third consecutive month of growth and the second month in a row that it exceeded market expectations.
Unfortunately, the market expects the recent upward trajectory of non-farm workers to reverse in August, when economists now expect it to be only 750000 in August.
The orange line in the following figure represents non-agricultural changes.
The non-farm sector in the United States has improved greatly over the past 17 months, but it is still a long way from where it was before the outbreak. The chart below highlights the loss of 5.7 million jobs in the United States since the beginning of 2020.
The market expects the unemployment rate in the United States to continue to fall, and the downward trend over the past year is already clear.The US unemployment rate fell rapidly from 5.9 per cent to 5.4 per cent in July and is expected to fall further to 5.3 per cent in August.In addition, it is necessary to pay attention to the U6 unemployment rate, which can provide a broader understanding of unemployment in the United States.
The market hopes that the average annual rate of hourly wages will stabilize at 4%. As inflation is a key topic worthy of attention, wage growth rate is a key indicator of future enterprise costs.
Implications of other employment data
With the increase in the number of Delta variant cases and deaths in the United States, there are concerns that the US economic situation may deteriorate as a result. Therefore, it is necessary to pay attention to the reflection of some other major employment data on the US job market.
In a worrying sign, the US ADP in August was just 374000, well below market expectations of 640000. Although ADP in August 374000 increased from 326000 in July, the previous figure was significantly lower than in previous months. With that in mind, this does look like a potential turning point for overall non-farm payrolls data.
The blue column in the following figure represents the change of ADP in the United States, while the black dotted line represents the change of non-agriculture.
In recent months, the number of new and renewed jobless claims has gradually declined, a trend that continued throughout August. Although there is no direct link between these data and employment data, it at least gives us a good idea of whether unemployment in the United States is surging, which could affect the non-farm data in August.
Although the ISM manufacturing PMI was 59.9 in August, there was little change compared with the previous value of 59.5.But the ISM manufacturing payrolls index fell sharply in August, entering a contraction zone (from 52.9 to 49), indicating a negative outlook for US manufacturing jobs and could lead to weaker non-farm data.
The dollar has been at a disadvantage recently, with the index falling back to Fibonacci support of 92.45 and 61.8%. Before the dollar continues to rise, we are likely to see a correction, although we need to see an excellent performance in the jobs report to help push the dollar higher. On the contrary, we are likely to see a further decline in the dollar as markets expect a pessimistic assessment of the US economic recovery. Near-term support for the dollar index is between 92.23 and 92.45, and a fall below 91.77 will see the market sell-off intensify.
(daily chart of dollar index)
At 18:03 Beijing time on September 2nd, the dollar index was at 92.4143.