US: Expect headline nonfarm payrolls to moderate in December – Deutsche Bank

Analysts at Deutsche Bank suggest that the main event this week will be the December employment report from the US which will be released on Friday.

Key Quotes

“While we expect headline nonfarm payrolls (150k forecast vs. 178k previously) to moderate following a strong gain in government employment in November, private payrolls (150k vs. 156k) should remain roughly steady.”

“As always, Thursday's ADP employment report (150k vs. 216k previously) will anchor market expectations going into Friday's report from the BLS. Regarding the latter, we will also be focused on average hourly earnings (+0.2% vs. -0.1%), which declined last month for the first time since December 2015. If our earnings projection is on the mark, the year-over-year growth rate would improve a couple of tenths to 2.7%. This is important for monetary policymakers, who are looking for confirmation that the economy has reached full employment.”

“Even if the unemployment rate were to rise a tenth to 4.7% as we anticipate, it would still be below the Fed's most recent estimate of the longer-run rate (4.8%).”