Jobs: Details Better Than Headline

Includes: FXC, FXE, FXS, FXY, UDN, UUP
by: Marc Chandler

The US created a net 155k jobs in December, which was a bit disappointing to those who thought the ADP data was a reliable tell of a stronger number. However, the details were stronger than expected. These include an increase in the 0.1% increase in the average weekly hours and a 0.3% increase in hourly earnings, the largest of the year. Moreover, private sector jobs growth was stronger than the headline as the government sector shed 13k jobs.

The manufacturing sector added 25k of the private sector's 168k net new jobs. The manufacturing sector remains a key bright spot for the U.S. economy. Upward revisions added another 38k jobs, which if added back to the headline, would be close to the 200k increase that some economists forecast.

In 2012, the U.S. economy created 158.6k jobs on average per month. This is actually down slightly from the 175.4k monthly average in 2011. The employment data is consistent with a rise in manufacturing output and should underpin income and perhaps to some extent consumption.

Separately, Canada had a strong employment report. The 39.8k net jobs created were almost 8-fold more than the Bloomberg consensus and even this understates a bit as 41.2k full time jobs were created. Proportionately this would be as if the U.S. were to create about 400k jobs.

The dollar has seen its gains pared in the aftermath of the data, though the Canadian dollar is the only major that is higher on the day against the U.S. dollar and even this is marginally so. With the sharp downside momentum seen in recent days in the euro easing, position squaring could see a move toward $1.3050. Sterling has initial potential toward $1.6050-80. Yen seems poised to consolidate against the dollar and recoup some ground on the crosses.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.