US Employment Numbers Surprise
- Non-Farm Payroll stronger than anticipated
- Shows the underlying fundamentals in America still strong
- Gives US strength in the US/China trade situation
- “Risk on” appetite
During the early US session on Friday, the Bureau of Labor Statistics released the annual employment figure, which has been a pleasant surprise. This is undoubtedly the biggest market-moving piece of news of the month. As a result, a lot of traders were waiting to see what information would be released in order to discern what the Federal Reserve will do, how the US will act regarding the China trade situation, and what to do next when it comes to risk appetite.
The headline number, Non-Farm Employment Change showed 266,000 jobs added for the month of November, as opposed to the expected 186,000. Beyond that, the previous month was revised from 128,000 jobs added to 156,000 jobs added. This in and of itself is extraordinarily bullish and should continue to send the market into more of a “risk on” type of move.
The Unemployment Rate came in at 3.5%, lower than the anticipated 3.6%, which was also a surprise as not only are people reentering the workforce in the United States but are finding employment at the same time. The favorable Unemployment Rate shows an extraordinarily strong underlying market, and it should continue to favor the US stock markets, as well as the idea of the United States leading the charge globally.
United States still the place to be
Recently, there were a few softer than anticipated numbers coming out of the United States. There were concerns that the ADP Non-Farm Payroll numbers were lower than expected and that they showed that there were cracks in the employment picture for the Americans. However, thanks to the recent favorable numbers, an amount of relief will probably enter the marketplace when it comes to the US.
Overnight, China had started discussions on giving out exemptions for soybean and pork purchases from the United States for certain companies. This is an indication that they might not have as strong of a hand as once thought. Donald Trump has suggested more than once that he doesn’t care about the stock market as much as he does jobs. Whether this is true or not, this will certainly embolden him when it comes to the trade war.
You should still see quite a bit of money flowing into US assets, and away from the Third World for the time being. Beyond that, the “risk on” trade may look a little bit different than usual, meaning that stock markets in the United States should do fairly well while some of the other less liquid and exotic markets may struggle.