Looking to the Futures: Another Upside Surprise for U.S. Payrolls

Job growth remained solid last month with non-farm payrolls, once again, above market expectations.

The US Labor Department reported that employment rose by 263,000 in November. This was above market expectations for a gain of 200,000 jobs.

However, the U.S. unemployment rate remained unchanged at 3.7% last month as the household survey showed the number of unemployed persons remained essentially unchanged at 6 million in November, according to the U.S. Bureau of Labor Statistics.

A breakdown of the jobs data showed that private sector jobs rose by 221,000 and the public sector saw payrolls rise by 42,000 in November.

Leisure and hospitality saw the largest increase in employment adding 88,000 jobs, followed by health care with 45,000 jobs added last month.

The widely watched manufacturing sector also saw employment gains adding 14,000 jobs in November.

As always with the employment report, we like to dig further into the data where we saw that the average work week declined by 0.1 hours to 34.4 hours worked and average hourly earnings rose by 0.6% or $0.18 to $32.82. Wages are up 5.1% versus one year ago.

October payrolls were revised upward by 23,000, but September payrolls were revised lower by 46,000 according to the U.S. Bureau of Labor Statistics.

Our neighbors to the north in Canada saw employment increase by 10,100 jobs in November, above pre-report expectations for an increase of 5,000 jobs. 

The unemployment rate fell by 0.1% to 5.1% last month. Expectations were for a 0.1% increase to 5.3%.

Outside of the employment reports last week, the market saw better than expected readings in third-quarter GDP estimates (+2.9%), Personal Income for October (+0.7%), and Initial Jobless Claims (+225,000).

This was offset by weaker than expected Challenger Job Cuts for November (76,835), the ISM Manufacturing PMI for November (49.0), and Chicago PMI for November (37.2).

November’s employment data will likely keep the Federal Reserve hawkish and continue raising interest rates in order to tighten monetary conditions to help fight inflation.

Market reaction following the jobs report had stock index futures moving lower and bond yields moving higher, especially at the middle and longer end of the yield curve.

We also saw the U.S. dollar index rally, while precious metal prices moved lower.

Looking at the daily chart for the December 2022 E-mini S&P 500 futures (ESZ22), we notice prices have found some selling interest after a recent move above the 200-day moving average (red).

The market is currently testing the 10-day moving average (white), which is currently just above the 4000.00 level.

The 14-day RSI has started to turn down, but still remains relatively strong with a current reading of 61.40.

Near-term chart support is seen near the 3950.00 price level, with more significant support found at the November 17 low at 3912.50.

Near-term chart resistance is seen at the December 1 highs of 4110.00, with more significant resistance found at the September 13 highs of 4175.00.

December 2022 E-mini S&P 500 Futures (ESZ22)

First Notice Day: December Live Cattle

Factory Orders: 10:00 a.m. ET

ISM Services PMI: 10:00 a.m. ET

Export Inspections: 11:00 a.m. ET