07 December 2023
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US labour market data continues to soften

Daily Outlook - 7 December 2023

By Daniel Richards

Following on from the downward surprise in job openings in the US reported the previous day, the ADP employment data out of the US yesterday also came in below expectations, cementing the slowdown in the US labour market. The employment change in November was 103,000, lower than the predicted 130,000, while the October figure was revised down from 113,000 to 106,000. What gains there were were driven by the services sector but largely health and education, while the leisure sector cut jobs for the first time since February 2021 in an indication that the US consumer is starting to weaken. Construction and manufacturing also cut jobs. All eyes will now be on the NFP report due at the close of the week, but markets have already raised their bets that these weaker data points confirm that the Fed has come to the close of its hiking cycle.

German factory orders declined 3.7% m/m in October, down from an (upwardly revised) 0.7% in September and missing the projected 0.2%. This is the latest downward surprise from the Eurozone industrial sector, following on from the miss in French industrial production released yesterday.

The Bank of Canada kept its benchmark interest rate on hold at 5.00% yesterday, as had been widely anticipated. The bank’s statement outlined its belief that its tightening so far was working in dampening demand, but maintained that they were prepared to hike further if necessary as the ‘Governing council is still concerned about the risks to the outlook for inflation.’

Today’s Economic Data and Events

14:00 Eurozone GDP growth, Q3, % y/y, final print. Flash estimate: 4.3%

17:30 US initial jobless claims, week ending December 2. Forecast: 200,000

Fixed Income

  • The Bank of England’s Governor Andrew Bailey was speaking yesterday where he stressed that rates would need to stay around current levels ‘for an extended period to bring inflation back to target on a sustained basis.’ Gilt yields have been falling over the past two weeks nonetheless, with the 2yr dropping 2bps to 4.494% yesterday while the 10yr fell 8bps to 3.943%, the first time it has closed under 4% since May.
  • In the US, yields on 10yr USTs fell 6bps yesterday to 4.1040% while the 2yr closed up 2bps to 4.5929%.


  • The dollar index closed up 0.1% as it gained against its basket of peers for the third day in a row despite the weaker jobs data, with haven play likely driving the gains.
  • EUR closed 0.3% lower as there was more weak data out of Germany, while the loonie closed flat against the USD at 1.3593 as the Bank of Canada held rates as expected.


  • Asian equity markets were largely positive yesterday with the Hang Seng adding 0.8% and the Nikkei 2.0%, although the Shanghai Composite ended the day 0.1% lower.
  • The weaker ADP jobs numbers initially drove a modest pick-up in US equities, but concerns around a slowdown seemingly took precedence later, and all three major benchmark indices closed lower. The Dow Jones, the S&P 500, and the NASDAQ fell 0.2%, 0.4%, and 0.6% respectively.
  • Locally, the DFM ended down 0.2% while the ADX dropped 0.4%. In Saudi Arabia the Tadawul closed up 0.3% while the EGX 30 closed 1.7% lower.


  • Oil prices fell for a fifth day running yesterday as concerns around a global slowdown are driving the narrative and outweighing any discussion of further production cuts. Brent futures fell 3.8% to USD 74.3/b, levels last seen in early July. WTI also fell to five-month lows, dropping 4.1% to USD 69.4/b.


Written By

Daniel Richards Senior Economist

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