All Eyes on US Labour Data

At 1330 this afternoon, attention will turn to the release of US labour market data, as markets look for further insight into the health of the world’s largest economy. Given that the labour market has been one of the key drivers of inflationary pressure in the US, markets will be paying particular attention to the extent to which today’s figures could impact policy makers ahead of next FOMC on 7 November.

Following last month’s data release, the dollar came under pressure with the nonfarm payroll print indicating 142,000 new jobs being posted over the course of August, missing expectations of 160,000. Fewer jobs were also posted over July, which came in at 89,000 – well below the rolling year average of 184,000.

Such a slowdown raised expectations that the Fed may be forced to cut more aggressively than previously forecast, something which eventually came to pass when the Fed cut rates 50bps on 18 September.

Today’s print – which is expected to come in at 140,000 – also comes against a backdrop of the Bureau of Labor Statistics downwardly revising payrolls by 818,000 in the year ending to March 24, raising convictions that the US labour market may be cooler than previously thought.

Nevertheless, this afternoon’s figures also follow Wednesday’s ADP employment print (which looks at payroll data from more than 25 million U.S. employees) suggested that job creation showed a “widespread rebound after a five-month slowdown”.

Last month’s payroll figures also showed unemployment rates rose easing 10bps to 4.2% (coming off from July’s levels which marked the highest level of unemployment since October 2021).

Hence today’s data (which includes nonfarm payrolls (exp. 140,000), unemployment rate (exp. 4.2%) and earnings (exp. 3.8%)) and its potential impact on the Fed’s monetary pathway will be closely monitored.

This morning, the government have issued a statement pledging £21.7bn in available investment for projects to capture and store carbon emissions across the UK over the next 25-years.

At the heart of this, the funding will assist with the creation of two carbon capture sites in the North West and North East of England. It is hoped that these will assist with the removal of over 8.5 million tonnes of carbon emissions each year (or taking close to 4 million cars off the road).

According to the statement, the projects will also create “thousands of jobs, attract £8 billion of private investment, and accelerate the UK towards net zero in 2050”.

As we looked at earlier in the week, the UK’s last operational coal-fired powered station ceased operations on Monday, calling time on 142-years of coal-powered electricity in the UK and making the UK the first major economy to have stopped using coal as a means of generating electricity.