The firm estimates non-farm payrolls to show a growth of 75k in December, with private payrolls also matching that figure at 75k. Much like what Citi noted, JP Morgan also points to seasonal factors as underpinning the headline payrolls number:
“The summer deceleration and subsequent acceleration bears some resemblance to last year, so there could be a bit of residual seasonality in play that causes job growth to keep accelerating. We thus forecast a near-trend value of 75k for payrolls, as a range of labor indicators don’t point to major changes in labor market conditions compared to earlier months.”
That being said, they do point out the risk of weather having an adverse effect but one that is unlikely to appear here. As mentioned before, this is usually one that typically appears more in January and/or February.
“Heating degree days showed weather in early November as somewhat warmer than usual, turning to colder than usual in December, which could weigh on jobs, though the effect is probably not large.”
As for the unemployment rate, the firm forecasts the reading to be at 4.6% in December i.e. unchanged when looking at the rounded figure from November. That as they estimate the labour force participation rate to hold more or less steady at 62.5%.
However, JP Morgan also points to potential data quality concerns as affecting the jobless rate this time around. As highlighted yesterday, the firm warned that:
“Despite the government shutdown ending partway through the household survey reference week, a number of federal employees still classified themselves as being on temporary layoff. Reversing that in December could cut the unemployment rate about 4bp.”
So, there’s that to consider alongside the other potential distortions that could creep into the December report later in the day.
This article was written by Justin Low at investinglive.com.