Morning Brief – Non-farm Payrolls come in hot

The US dollar moved sharply higher after the United States jobs report came in much-better this afternoon, however, stock markets dipped as they feared the strong jobs number could embolden the FED to aggressively hike rates again.

Data showed that the US economy unexpectedly added 263,000 jobs in November of 2022, beating market forecasts of 200K, and following an upwardly revised 284K in October.

It was the lowest job gain since April last year, as the labour market is normalizing after the pandemic shock. Still, it continues to signal a healthy and tight market, above the pre-pandemic.

Notable job gains occurred in leisure and hospitality, including a gain in food services, and drinking places, health care, and government, mostly in local government.

However, employment declined in retail trade, namely general merchandise stores, electronics and appliance stores, and furniture stores, and in transportation and warehousing.

The unemployment rate in the US was unchanged at 3.7 percent in November 2022, matching market expectations and remaining close to September’s 29-month low of 3.5 percent.

It is noteworthy that jobless rate has been in a narrow range of 3.5 percent to 3.7 percent since March, suggesting that the tight labour market will likely continue to contribute to inflationary pressure in the world’s largest economy for some time to come.

The Canadian dollar fell against the greenback after another soft jobs report. Additionally, the move higher in the US dollar index created USDCAD strength.

Data showed that Canadian economy added 10.1 thousand jobs in November of 2022, above market expectations of a 5 thousand gain. Full-time work rose by 50.7 thousand while part-time fell by 40.6 thousand.

At the same time, it fell in several industries, including construction and wholesale and retail trade. The recent drop in the price of oil continues to hamper that sectors job creation.