US: NFP likely slowed in December – TDS

Analysts at TD Securities are expecting the US payrolls to slow again in the December report, mainly because of payback for exaggerated strength.

Key Quotes

“Through the volatility, the trend has slowed from 200K-plus in 2018, but not dramatically. As noted, our 145K forecast for payrolls implies a 189K average for Q4 (assuming no revisions), which is above the 173K average for the first nine months of the year. The implication: The December reading could be even weaker without necessarily signaling a major slowing in the trend.”

“The trend in payrolls gains will probably be revised down a bit in the annual revision in early February, but monthly gains would probably have to drop to 100K or less for the unemployment rate to start rising.”

“We expect the unemployment rate to hold at 3.5% in the December report after dropping by 0.1 point in November. Our 0.3% forecast for the rise in average hourly earnings implies up 3.1% on a 12-month-change basis, identical to the November reading.”