U.S. nonfarm payrolls likely to have increased in November

The November U.S. employment report, which is set to be released on 2 December, is expected to show that nonfarm payrolls increased 175k, noted Barclays in a research report. Out of the 175k rise, 165k gains are likely to have been registered in the private sector, especially service-providing employers. The remaining 10k is expected to have been added in government payrolls.

The initial and continuing jobless claims have continued to trend lower, strengthening the view that the labor demand in U.S. continues to stay strong, said Barclays. But in the last few months, the relationship between employment and claims has softened. Nevertheless, given the huge drop in survey week claims, there is some upside risk to the employment growth forecast, should the historical relationship between employment growth and initial and continuing claims be restored, according to Barclays.

In the goods-producing sector, early manufacturing employment indicators for October continue to be soft in spite of certain improvement. Thus it will not be a surprise if payrolls decline in this sector. This, along with another month of falling mining employment, might result in contraction in goods-producing employment.

“Elsewhere in the report, we expect the unemployment rate to decline one-tenth, to 4.8 percent, average hourly earnings to rise 0.2 percent m/m and 2.8 percent y/y, and the average workweek to remain unchanged at 34.4 hours”, added Barclays.

The overall job gain of 175k might affirm the U.S. labor market’s ongoing strength. The rise in payrolls, along with the ongoing improvement in wages, might stimulate household income and maintain consumption on path. At these numbers, the growth in employment is believed to be sufficient in order to keep the U.S. Fed on the track to hike rate in December, stated Barclays.

At 05:00 GMT, the FxWirePro's Hourly Strength Index of USD was neutral at -1.39567. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex