Key Events In Developed Markets Next Week - Saturday, Sept. 26

Increasing COVID-19 cases, political uncertainty and unemployment creeping upwards make it a very interesting time in developed markets. Keep an eye out for US and Eurozone labor market data, as well as continued Brexit talks.

US: Uncertainty could increase next week with the jobs report

The rising number of COVID-19 cases globally, election uncertainty and the lack of a new fiscal support package have all weighed on US equities as investors become more cautious on the outlook for growth and corporate profitability. This sense of unease could build next week with some key data, most notably next Friday’s September jobs report.

Employment plunged 22.16mn between February and April, but the re-opening of the economy from May has seen more than 10.6mn of those jobs recouped. The market is looking for another increase in September, but of “only” 900k, meaning employment would remain more than 10.5mn lower than February even after five months of gains.

We look for payrolls growth of 850k with the unemployment rate only moving slightly lower as job gains are offset by a rising participation rate

Evidence from high-frequency data, such as payrolls tracking figures from Homebase suggests a plateauing in private sector employment while purchasing managers’ indices suggest only modest gains. Set against this we know that last month’s employment gain of 1.37mn included 240k government Census workers who were chasing people up to fill in their forms. There is going to be a partial unwind in the September report which will subtract from the headline figure. At the same time, initial and continuing claims remain highly elevated, underlining the strains in the jobs market – remember initial claims remain 200k above the peak level experienced during the Global Financial Crisis. We, therefore, look for payrolls growth of 850k with the unemployment rate only moving slightly lower as job gains are offset by a rising participation rate.

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