Summary for the 4th of February 2019


The US employment continues to be a positive surprise. The nonfarm payroll employment increased by 304 000 in January. The market was expecting 165 000. The number for December was revised down by 90 000 to 222 000, still the employment situation is still strong. Job gains have averaged 241 000 pr. month the last 3 months.

The unemployment rate raises from 3.9% in December to 4% in January. The raise is explained by the partial federal government shutdown, which results in a temporary layoff of 175 000 workers, thus raising the total unemployment number by 240 000. Now that the shutdown is over, the unemployment number will be declining.

The average hourly earnings for private nonfarm payroll raise by 0.1% from December. Over the year, the average hourly earnings have increased by 3.2%.

All the above numbers show a strong growth in the US economy. With strong job gain, and an ok gain in earnings, all this will lead to a growth in consumer spending, which is the most important factor in driving the economic growth. Due to the hourly earnings haven’t risen more than 3.2% over the year even with strong employment numbers, the Federal Reserve will need to wait with a contractionary monetary policy.

The EU area also shows an economic growth, even though the activity indicators, like PMI and Economic Sentiment Index have declined in the second half of 2018. The GDP growth of 0.4% on the first half of 2018 have also declined to 0.2% on the second half. Though, all the declines are due to temporary factors which are about to be reversed. Most important factor is the latest vehicle emissions regulation that have affected the vehicle industry, especially in Germany (vehicle production in Germany has declined by 9% in 2018, the biggest decline since the great recession in 2008). The numbers for new orders have risen considerably. The production decline wasn’t  because of the demand, but because of the supply, and the production in vehicles will start picking up again soon.

Consumer spending in the EU is expected to raise. On the second half of 2018, the spending declined due to high energy price which was because of high oil price and carbon price. The price hike has affected the growth in average hourly earnings. The EU’s inflation rate from Friday shows an annual ease which means the energy price has started to decline. Total decline in inflation is 1.4% in January from 1.6% in December. Given how the oil price has been moving lately, the ease in energy price will continue in the next few months. This will give a higher average hourly earnings and consumer spending.

Indices on 4th of February: The strong employment numbers haven’t led to significant gains in the US stock markets, probably due to a still weak consumer confidence and not many positive surprises from released earnings reports.   

Dow: +0.3% (1st of February )
S&P 500: +0.1% (1st of February)
Nasdaq: -0.2% (1st of February)
Nikkei: +0.5% (4th of February)
Chinese indices: Closed (4th of February)
STOXX Europe 600 Index: +0.06% (4th of February)

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