A good jobs market is a boring jobs market
The US jobs market has added 228,000 jobs in the past month according to numbers released this morning. The unemployment rate remained at 4.1% with wages increasing 2.5% on the year. These numbers are wonderful as expected and they reinforce the view that economic progress is more a slow burn than a thunderclap.
USD has rallied although the wage numbers are far from the level wherein inflation watchers will be twitching with anticipation.
The University of Michigan’s consumer confidence numbers released at 10am Eastern may be enough to show whether the optimism from the jobs market translated into purchasing intent through the Black Friday and Cyber Monday weekend.
Within the past few hours, both the UK and the EU have come to an agreement over the Irish border and it seems that negotiations can now move into Phase 2 which will allow the UK to begin putting together a Free Trade Agreement with the EU and, more importantly for sterling, a transitional deal.
The deal is a classic bit of EU fudge, however, and is not the paean to certainty for trade and investment that Brexiteers will say it is. Within the text released by both parties the UK remains committed to North-South cooperation while guaranteeing against a hard border and that “the United Kingdom’s intention is to achieve these objectives through the overall EU-UK relationship”. That sounds like a post-it note saying “Fix Me”.
This is the first of a great many UK/EU can kicks within these negotiations. Sterling won’t react positively in a meaningful manner until a transitional deal is agreed to stave off a cliff edge on March 29th 2019.
Things are quiet as we wait on next week’s Fed meeting, European Council meeting, and the start of the Catalan elections.
Have a great day and better weekend,
Jeremy Cook, Chief Economist