Making Sense

Data today out of U.S showed Labor Productivity* rose for Q3 beating consensus estimates by 30 bps and increasing sharply from Q2 reading of 4.7%. Q3 Unit Labor costs were down 1.20%, beating consensus estimates of -0.90% and prior month reading of -0.80%. The ADP employment numbers showed private payrolls added 103,000 jobs in November, -27K from consensus est and below prior reading of 113K. Acc to the press release, the post pandemic boost that saw strong job creation in Restaurants and Hotels, is behind us and the return to trend in Leisure and Hospitality suggests the economy as a whole will see more moderate hiring and wage growth in 2024. Today's data comes after the surprisingly lower JOLTS data yesterday and elevated continuing claims data. The data shows better demand and supply balance occurring in the labor market coupled with labor productivity gains bodes well for a soft landing narrative. US2s are trading at 4.585% from session highs of 4.6250% and US10s keep pushing...

Meditate. Visualize !! Yet another strong US economic release -  Initial jobless claims for the week ending February 25 came in at 190,000 (Prior 192K) with 4w moving average at 193K.  Initial claims for unemployment insurance is a leading economic indicator because it is an indication of emerging labor market conditions in the country.  Weekly Continuing Claims came in at 1.655 mln; Prior was revised to 1.660 mln from 1.654 mln. While continued claims are not a leading indicator, they provide confirming evidence of the direction of the U.S. economy. Low levels of Initial claims show tightness in the labor market and therefore sticky wage-based inflation pressures. Unit labor costs in the nonfarm business sector increased 3.2% in the fourth quarter of 2022, reflecting a 4.9% increase in hourly compensation and a 1.7% increase in productivity. Unit labor costs increased 6.3% over the last four quarters. Q4 productivity increased 1.7%, a 130 bps revision below the prelimina...

"Discipline is choosing between what you want now and what you want most" - Abraham Lincoln Data releases: Strong US ADP employment numbers and the low level of initial jobless claims boosted the usd index overnight.  According to the Dec ADP employment report, private-sector employment rose 235,000 well above expectations of 150,000. Annual pay for “job-stayers” rose 7.3%. US New jobless claims came in below estimates at 204k (exp. 225k). Meanwhile US Continued Jobless Claims came in at 1.694M (exp. 1.708M). November trade deficit narrowed to $61.5 billion, lowest since September 2020 on a decline in both exports and imports as global demand weakened.  A strong ADP employment report adds to the expectation of a stronger NFP print due to be released today (exp 200k, u/r 3.70%, wage growth 0.40% mom). Initial jobless claims are a leading indicator and the low level of claims goes to show the tightness of the labor market. Labor market tightness fuels concerns that the Fed migh...