U.S. Reports Weak Job growth As Unemployment Dives
FxPro Financial Services Ltd | Dec 03, 2021 09:54AM ET
In November, The US economy created 210K jobs, a shockingly low number compared with the expected 550K. And this is the weakest increase since January.
This indicator noted a close correlation with the dynamics of new coronavirus cases, which are also at their highest since the beginning of the year in the USA.
Average hourly earnings rose by 0.3%, maintaining the annual rate of 4.8% and falling short of expectations of a rise to 5.0%. It will not be surprising if policymakers comment in the coming days to raise the question of whether the recovery is losing steam. This is a negative surprise for the dollar as it reduces the pressure on the Fed with accelerated unwinding and faster rate hikes.
The unemployment rate and the share of the economically active population, measured differently, contrasting sharply with the data above, marking a significant improvement. The unemployment rate has collapsed from 4.6% to 4.2%. This is a return to the multi-year norm, indicating a full labour market recovery.
Notably, however, the economically active population has risen to 61.8%, indicating that the fall in unemployment is not the result of a shrinking labour force.
Traditionally, markets pay more attention to month-on-month changes in employment numbers, but in this case, the effect of this extremely weak NFP data is balanced by a healthy, low unemployment rate.
h2 Brazilian Markets Bottom Out/h2Brazilian market index Bovespa earlier this week came close to the psychologically crucial round level 100,000, having lost around 23% from its peak six months ago. Despite this backdrop, the Brazilian market looks too depressed and is already showing some signs of recovery.
Wednesday and Thursday's intraday dips met increasing demand with a noticeable 3.7% gain on Thursday. In addition, the Brazilian index outperforming its EM peers in recent days.
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The technical picture supports the idea of a close or even already occurred reversal to the upside. The RSI on the weekly charts has returned from the oversold territory - a signal of a potential rebound or reversal to growth.
The divergence between the RSI and the index confirms the bullish sentiment, reflecting the reduced pressure on the Brazilian stocks. The positive dynamics of foreign indices are also on the buyers' side. Chinese indices have stopped falling since the beginning of the month, bouncing back from multi-month lows.
US benchmarks gained support on Thursday, surfacing after briefly dipping below critical levels. Brazilian and many other markets look very attractive for downside buying without a principal reversal in US equities.
The FxPro Analyst Team
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