The focus among traders today
will be in the United States, which will release the jobs numbers for February.
This is a monthly number usually released by the Labor Department to provide investors
and policymakers with a snapshot about the health of the economy. It is usually
one of the most-watched number in Wall Street and around the world.
Today, the headline non-farm
payrolls number is expected to show that the economy added more than 181K jobs
in February. This might be much lower number
than the 300K+ that was released in the previous month. In December too, the
economy added more than 300K jobs. A reading close to this may be a victory for
the US and a sign that the economy is doing well. This number comes two days
after ADP released its own reading, which showed that the economy created 181K,
which was below the expected 189K. The number also comes a day after data from
Challenger showed that the number of layoffs had increased by more than 100%.
Closely watched after the
headline NFP number will be the unemployment rate, which is expected to reduce
to 3.9% from last month’s 4.0%. The unemployment number measures the number of
people of working age, who are not working. This number will be watched
together with the U6 unemployment rate number. U6 measures the number of unemployed
people and those who are working part-time for economic reasons. This number is
expected to remain at 8.1%.
The next number that traders will
focus on will be the wage growth. This is an important number because an economy
that is in full employment but one that wages are sluggish is not considered
very good. This is exactly what is happening in Japan, where the unemployment
rate is below 3% but one where wages are not growing. In the US, traders expect
the wage growth to remain unchanged at the 3.3% level. On a month-over-month
basis, the average hourly earnings are expected to remain at 0.3%. Closely
related to this will be the average hours worked. The average number of hours
worked is expected to remain at 34.5.
Traders will also focus on the manufacturing
payrolls. In the US, the rate of manufacturing has been declining over the
years as manufacturers shifted their manufacturing basis from the country to Mexico
and China. The sector is expected to have added 11k jobs, which will be lower
than the previous month’s 13K.
Ahead of the jobs numbers, the
dollar is relatively strong because of the weakness in the euro. The euro forms
the biggest constituent of the dollar index. This has been offset by the
Japanese yen, which gained slightly today following the release of the stronger
GDP numbers. The economy expanded by 1.9%, which was higher than the expected
1.8%. This was boosted by the strong household spending.
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