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Economic Data Deluge

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Sandwiched in between two important data points of U.S. employment — yesterday’s private-sector payroll totals from Automatic Data Processing (ADP) and tomorrow’s non-farm payrolls from the U.S. Bureau of Labor Statistics (BLS) — we get today’s Initial Jobless Claims report, as we do most every Thursday morning. Results went back down to the middle of the very strong 200-225K range, to 214K.

These numbers had been creeping up out of that range in recent weeks, but last week’s headline brings the 4-week average down to 224K. Plenty of holiday and other seasonality adjustments must be taken into account around this time, of course; in any case, coming down 9000 claims from the previous week’s upwardly revised 223K represents domestic labor strength, no matter how you slice it.

Continuing Claims, on the other hand, have tiptoed above 1.8 million for the first time in many months, from 1.73 million the previous week. These figures had gone as low as barely above 1.6 million during select weeks in 2019, though even above 1.8 million we’re still in good shape on longer-term jobless claims. Plus, reporting from the week previous to initial claims, there is even more seasonality to be washed out of these numbers as time moves forward.

All this brings us to what analysts expect for the Employment Situation due out before tomorrow’s opening bell. Though yesterday’s ADP numbers were way above expectations, few adjustments seem to have been made for the BLS headline: 160K is still the estimate from analysts, with half-century low 3.5% Unemployment expected. Average hourly wages are expected to be up another 0.3%, following November’s report of wages up 3.1% year over year.

Should these figures come in as expected, they should only help positive market sentiment, following a murky start to 2020 with worries of fresh Middle Eastern turmoil throwing a wet blanket on gains of late. However, if recent history is an indicator, we may expect tomorrow’s jobs numbers to outperform current estimates. After all, an ADP headline of 202K yesterday posted a 35% positive surprise. Should that happen again tomorrow, expect market indexes to catch fire again!