What do the seasonal trends say about December non-farm payrolls

The bulk of the pre-non farm payrolls numbers point to a soft reading but I think that’s priced into the consensus at +160K compared to +227K prior. The late Thanksgiving doesn’t make for an obvious risk but I would suspect it biases it higher, though we didn’t see that in ADP or ISM services.

Seasonal adjustments are big part of the equation in the December report, given all the short-term jobs in holiday retail and delivery. According to BMO:

46% of previous
unemployment reads in December have been lower-than-expected, 15% have been
higher-than-estimates, and 39% have matched the consensus.

That points to downside risks to the 4.2% unemployment rate, which is consensus this month. I would note, however, that the unrounded unemployment rate was 4.2457% in November, so there is plenty of ground to cover there before getting at 4.1% reading. Also keep an eye on labor force participation.

As for the headline, the split is 54% of the time to the downside and beating
46% of the time. I wouldn’t read much into that skew but a soft reading today would solve just about every market problem as it would drive yields lower and erase worries (for at least a month) about a Fed pivot to neutral.

Other spots to watch are wages and private payrolls.

This article was written by Adam Button at www.forexlive.com.