U.S. payroll gains seem to have remained strong in December

U.S. payroll gains are expected to have remained strong in December. So far in 2016, nonfarm payrolls have averaged 180,000 and November’s gain of 178,000 was nearly in line with that average. According to a Societe Generale research report, nonfarm payrolls are expected to have risen 184,000, particularly in line with the recent trend. Payrolls gains are anticipated to be relatively widespread, with rises likely in professional business services, construction, leisure and hospitality and education/health.

One-month diffusion index has averaged 57.4 so far in the December quarter, close to the year-to-date average of 57, implying a healthy breadth of gains. Retail sector was one surprise in the payrolls data in the past couple of months. The sector lay off 9000 jobs in October and another 8000 positions in November. Most of this was focused in the clothing/accessories sub-sector that lost 18,600 jobs in October and shed another 17,600 in November. In December, retail jobs are expected to have rebounded by 10,000, said Societe Generale.

In the meantime, average hourly earnings dropped 0.1 percent in November; however, calendar effects might have resulted in recovery of 0.3 percent in December that might push the annual rate back to 2.8 percent from 2.5 percent.

“The unemployment rate slid from 4.9 percent to 4.6 percent in November, but we expect that a rebound in the labor force in December led to a partial retracement, with the rate rising to 4.8 percent”, added Societe Generale.