US employment to be released on Friday. What to expect?
80 straight months of job gains.
The US non farm payroll has increased for 80 consecutive months. Tomorrow it is expected to make that number 81.
- The average gain over the 80 months is 197K.
- The average over the last 12 months is 189K
- The average over the last 3 months is 121K. That is the lowest 3 month average since June 2012 (5 years ago).
The unemployment rate back in June 2012 was at 8.2%. The rate now is 4.3%. As the unemployment rate goes lower, and you move toward full employment, the gains in employment become harder and harder to be sustained. As a result, the 121K three-month average at 4.3% unemployment rates is better than 121K in 2012 when unemployment rate was at 8.2%.
The expectation for tomorrow is for the US to add 178K jobs. That is stronger than the 138K in May. A number like that (or really most anything positive), would probably not deter the Fed from their planned path. The Fed is expecting to raise rates 1 more time in 2017 and also start a modest roll off the QE purchases starting in September.
The biggest surprise now would be if there was a oversized gain in jobs, along with a run up in the average earnings (say up to 2.8% or above).
- US unemployment rate is expected to remain unchanged at 4.3%. That is the lowest since May 2001
- The average hourly earnings are expected to rise by 0.3% MoM. The YoY is expected to rise by 2.6% vs 2.5%.
- The change in Manufacturing is expected to show a 5 K increase vs -1K in May.
- The underemployment rate came in at 8.4% last month. That was the lowest since September 2007 - before the start of the recession (see chart below). There is no expectations. Although not making at the lowest level since 2001 like the unemployment rate, a move below the 7.9% and we will be talking about it.
The employment report will be released at 8:30 AM ET/1230 GMT tomorrow.