December’s U.S. jobs report is set to deliver one of the gaudiest headline gains in months, but Jefferies says the strength will be short‑lived as labor demand still is not on a sustainable rebound.
Jefferies expects the December nonfarm payrolls due Friday to generate "gaudy headlines" boasting a bumper 155,000 job gain for the month and a 0.3 percentage-point drop in the unemployment rate to 4.3%, but this is likely to belie the labor market we have at home, which shows little evidence that demand for workers is re-accelerating.
A Big Print With Caveats
Jefferies expects a solid nonfarm payrolls gain, helped by seasonal quirks and specific sectors rather than a broad re‑acceleration in hiring. Much of the anticipated strength is tied to one‑off and seasonal factors that flatter the December data, rather than a genuine shift in underlying labor momentum, the economists said.
Government job gains for the month are expected to jump by 65,000 from November, according to the economists’ forecast. Given that the administration has made clear its plans to keep the pipeline of federal government employees lean, the expected jump in federal government hiring “has nothing to do with a change of heart in the approach to government employment and everything to do with calendar quirks,” the economists said.
The soft demand backdrop for labor is unlikely to change, Jefferies suggested, warning that “these impressive headlines are a consequence of calendar quirks combined with payback effects from October and November distortions that grossly overstate the difference in demand for labor in December.”
Source: Investing