Here are the consensus numbers that Wall Street expects out of today's NFP print:
- US Change in Nonfarm Payrolls (Dec) M/M Exp. 240K (Low 160K, High 305K), Prev. 321K, Oct 243K
- US Unemployment Rate (Dec) M/M Exp. 5.7% (Low 5.6%, High 5.8%), Prev. 5.8%, Oct 5.8%
- US Average Hourly Earnings (Dec) M/M Exp. 0.2% (Low 0.0%, High 0.3%), Prev. 0.4%, Oct 0.1%
- Whisper number: 270K
The breakdown by bank:
- Deutsche Bank 200K
- HSBC 211K
- Citigroup 220K
- Goldman Sachs 230K
- Morgan Stanley 240K
- JP Morgan 240K
- Credit Suisse 250K
- UBS 270K
Some further details and market reaction speculation courtesy of RanSquawk:
December’s NFP report is expected to show another month of strong employment growth with a median consensus number of 240K, marginally above the year-to-date average (228K) but down from November’s bumper figure of 321K jobs. The majority of analysts also expect the unemployment rate to drop by a tenth to 5.7% following November’s stellar employment report and the subsequent upwards revision to Q3 GDP. However, recent employment indicators have been mixed with the employment component in the ISM Manufacturing reading increasing from November but the same component in the ISM Non-Manufacturing data did see a marginal fall from the previous month. This week’s ADP figure came in above expectations at 241K with November’s reading also revised higher, showing a continued trend of employment growth. Elsewhere, the 4-week average of unemployment claims remains near its lowest level since 2000 and well below the 300K mark.
Labour data will take on increased importance this year as the Fed moves ever closer to rate lift-off. The FOMC minutes from the December meeting reiterated that monetary policy is to be data dependent and that officials see a rate rise before April as unlikely. Furthermore, most Fed officials saw no clear evidence of a broad-based acceleration in wages although a few participants suggested that the recent uptick in average hourly earnings could be a cautious sign of an upturn in wage growth. Of note, average hourly earnings is expected to slightly fall to 0.2% in December.
Market Reaction
A headline reading above the median expectation of 240K could well support equity markets and the USD although the greenback already resides near its highest levels since 2005. Treasuries could also see some curve steepening in the aftermath of a strong employment report with possible scope for downside after the 10y yield fell below 1.9% for the first time since 2013 earlier this week. In terms of major long-term implications, the recent trend has been one of steady employment growth and another figure in advance of 200K should do little to alter current market expectations of a Fed rate hike in mid-2015. However, a headline figure vastly out of sync with recent numbers has the potential to alter Fed thinking given the change in forward guidance and rhetoric concerning data dependency.