On Friday, the US official employment report for December is due in the United States. James Knightley, Senior Economist at ING explains the November report showed job creation well ahead of expectations, but he sees slower growth in December.

Key Quotes:

“After a remarkably strong November labour report, we expect to see a more muted yet still respectable set of jobs numbers for December. The November figure (266,000 with 41,000 upward revisions to the previous two months) was boosted by the return of formerly striking GM employees to the working population. It lifted the headline figure by around 46,000 directly with a further uplift from GM component suppliers who had put staff on temporary leave due to a lack of demand during the strike. Nonetheless, this was still well ahead of the consensus forecast of 180,000 and so helped cement the market view that there would be little need for the Federal Reserve to loosen monetary policy further after the three rate cuts seen in 2H19.”

“Consequently we see some scope for a mild data disappointment with payrolls predicted to rise 150,000 versus the 160,000 consensus. The range of analysts polled by Bloomberg is 125,000-210,000.”

“If we continue to see more of these economically disenfranchised people returning to the jobs market the upside for wage growth may continue to be rather limited. We look for wage growth of 0.2% month on month, 3.0% YoY.

“With the Federal Reserve seemingly content with its current monetary policy stance the prospect of any near-term interest rate moves appears remote.”