NFP preview: Expect strong November report

Analysts from Danske Bank, expect employment growth of 195K in November. The official US jobs report will be released on Friday.

Key Quotes:

“We expect the jobs report for November will show above trend progress in labour market. Employment growth has been lower than that indicated by other indicators such as PMI employment index in recent months. However, we expect a partial correction of that in November now that the effect of the hurricanes is diminishing. We expect employment growth of 195,000 in November. We expect the service sector to remain the main driver of job creation with 160,000 new jobs created in November.”

“Although 195,000 new jobs per month would not have been considered strong last year, the labour market has tightened significantly since. Therefore, the current trend (approximately 160,000 m/m) is still strong enough to keep tightening the labour market. We expect unemployment to remain unchanged at 4.1%. Finally, we expect that average hourly earnings increased 0.2% m/m (2.6% y/y vs 2.4% y/y in October).”

“While most labour market indicators are strong, the slack indicators still suggest there is some slack left, as the numbers of marginally attached and part-time workers for economic reasons are still above pre-crisis levels and long-term unemployed is still elevated. This suggests that the unemployment gap is not closed yet. One reason may be that people on the edge of the labour market do not have the necessary qualifications, as there are many positions which businesses are unable to fill.”

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