Market Survey on 12/02/2011

Market Survey on 12/02/2011
Events:
Employment Situation (Released on 12/2/2011 8:30:00 AM For Nov, 2011)

Prior
Prior Revised
Consensus
Consensus Range
Actual
Nonfarm Payrolls - M/M change: 80,000 (Prior) < 120,000 (Prior revised); 131,000 (Consensus); 90,000 to 175,000 (consensus range); > 120,000 (actual);

Unemployment Rate – Level: 9.0 %(prior) = 9.0 % (consensus) ; 9.0 % to 9.1 % (actual) >8.6 % (actual)
Average Hourly Earnings - M/M change: 0.2 %(prior) < 0.3 % (prior revised); 0.2 % (consensus) 0.1 % to 0.2 % (range) > -0.1 % (actual)
Av Workweek - All Employees: 34.3 hrs(prior) = 34.3 hrs (consensus) ; 34.3 hrs to 34.4 hrs (range) =34.3 hrs (actual)
Private Payrolls - M/M change: 104,000 (prior) < 117,000 (prior revised) < 150,000 (consensus); 115,000 to 190,000 (range) > 140,000 (actual)

Nonfarm payrolls unchange from prior revised, and gain from prior 80000, but less than consensus.
Unemployment rate fall 0.4% from 9.0%. Hourly earnings reduced –0.1%, less than prior gain and expectation. Private payrolls gains 40,000, but 10,000 less than expectation.

Overall the actually data is improving from previous month, though the hourly earning falls which is actually good for economy, but cut the cost and improve the productivity. Though less than the expectation.

In the private sector, goods-producing jobs slipped 6,000 after a 4,000 decrease in October and 36,000 boost in September. Construction jobs fell 12,000 in October after decreasing 15,000 the month before. Manufacturing employment edged up 2,000 after a 6,000 rise in October. Mining increased 2,000, following a 6,000 rise the prior month.

Private service-providing jobs advanced 146,000 in November, following a 121,000 gain the prior month. The November increase was led by trade & transportation (up 58,000), professional & business services (up 33,000), leisure & hospitality (up 22,000), health care (up 12,000). The temp help subcomponent of professional & business services rose 22,000 after a 16,000 gain.

The public sector continued to decline as government employment decreased 20,000, following a 17,000 drop in October.

Wage growth has been volatile recently as average hourly earnings in November slipped 0.1 percent, following an upwardly revised 0.3 percent gain the month before. Analysts predicted a 0.2 percent increase for November. On average, wage growth has been growing but at an anemic pace. Given the upward revision to October, the November dip should not been so disconcerting. Still, the uptrend is modest. The average workweek for all workers in November was unchanged at 34.3 hours, matching the market median forecast.

From the household survey, the unemployment rate unexpectedly dropped to 8.6 percent from 9.0 percent in October. The consensus forecast called for 9.0 percent. The rate decline reflected a 594,000 fall in the number of unemployed and a 278,000 increase in household employment. Basically, the unemployment rate fell largely due to a decline in the participation rate although household employment growth recently continues to exceed payroll jobs growth by a notable degree.

Overall, the latest employment report is favorable for the recovery continuing to gain traction. On the news, equity futures edged down as expectations were slightly stronger for payroll data and the unemployment rate dip was discounted.
Market reaction:
The equity market pulled back today from high, this should be a just temporary pullback to discount the overexpected job market.

The Monster employment index fell four points in November to 147 to indicate a slowing in online recruitment. Mining shows a sharp decrease as does retail and arts & entertainment. The data are not seasonally adjusted.

Stocks
U.S. stocks finished mixed, with a slight loss for the Dow Jones Industrial Average and a slight gain for the Nasdaq Composite as gains stuck from earlier in the week prompted by central bank interventions to the euro crisis. A sharp drop in the U.S. unemployment rate was offset by slower than expected jobs growth.
Treasurys
Worries over the euro zone's sovereign debt crisis resurfaced on Friday, and the flight to safety pushed up Treasury bond prices for the first time this week. Treasurys initially sold off on some positive signals from the latest US non-farm jobs data, sending the benchmark 10-year yield to hit 2.167%, the highest level since the end of October. But fresh buyers quickly swooped in to scoop up bonds at cheaper levels, a move that continues to underscore that the uncertainty about the euro zone easily overrides improving US data that has diluted significantly the risk of a recession.
Forex
Renewed fears about Europe's debt crisis hit the euro Friday, squelching a rally touched off by constructive U.S. payrolls data. A
rumors of an imminent downgrade of Spain's sovereign credit rating swirled, analysts also cited a report on The Hill.com's website that Congressional Republicans would seek to block any U.S. funds from contributing to a potential infusion of cash into the euro zone by the International Monetary Fund.

The dollar ended firmer against the euro to end the week at $1.3400.
Gold ended little changed on the day at just under $1,750 with light crude up $1 to $101.

Next weeks talking points (via Scottrader news letter)
Consumer Sentiment, ISM Services, Trade Data Due
The Thomson Reuters/University of Michigan index of consumer sentiment for early December is scheduled to be reported Friday. The gauge of consumer sentiment reached 64.1 in the final reading for November from 60.9 in October.

After finding surprising growth in the manufacturing sector this week, the Institute for Supply Management will report the results of its services sector survey on Monday. The latest monthly ISM non-manufacturing purchasing managers index is expected by economists to show a reading of 53.5, which is an improvement on the prior month's reading of 52.9. Any number above 50 indicates most survey respondents believed their business was expanding.

The Commerce Department releases the October trade balance Thursday. The U.S. trade deficit shrank unexpectedly in September, fueled by record-level exports and a sharp drop in trade from the debt-beleaguered euro area.

European Leaders To Discuss Fiscal Integration
European Union leaders will meet Friday in Brussels to discuss euro-zone fiscal integration and potential plans to change European Union treaties.
"We are going to Brussels with the intention to change the EU treaty," German Chancellor Angela Merkel said in a speech Friday. "The goal is a fiscal union that enforces both fiscal discipline in its members and has the necessary instruments to effectively handle a crisis."
Merkel will meet with French President Nicolas Sarkozy on Monday to prepare a package of proposals to strengthen euro-zone stability rules that will include a proposal to change the European Union treaty to give European institutions intervention rights into national budgets as a way to contain the current debt crisis.

Geithner To Meet European Leaders
U.S. Treasury Secretary Timothy Geithner is set to meet with euro-zone leaders Tuesday through Thursday to discuss efforts to resolve the continent's debt crisis, the Treasury Department said Friday.
Geithner plans to meet with European Central Bank President Mario Draghi, Bundesbank President Jens Weidmann and German Finance Minister Wolfgang Schaeuble in Berlin on Tuesday. On Wednesday, Geithner will meet with Sarkozy and France's Finance Minister Francois Baroin and Spain's Prime Minister-elect Mariano Rajoy Brey. On Thursday, Geithner moves on to Milan for a meeting with Italy's President of the Council of Ministers and Minister of Economy and Finance Mario Monti.