Thursday, November 3, 2016

A big shift in Q3 Productivity takes the (non-World Series) headlines this morning ahead of the opening bell, with a swing to +3.1% in the quarter. This not only is well beyond the 2% analysts had been expecting, but is the first time in the last four quarters that the productivity number was positive.

Even more, Q2’s productivity was revised upward from -0.6% to -0.2%. This sends a clear signal about strength in the domestic economy, and it happens just before the next U.S. payroll report due tomorrow and yesterday’s Fed decision not to raise interest rates this month.

Initial Jobless Claims reached 265K in the past week. This is up 7000 claims from the previous week’s unrevised 258K, and though it has inched up over the past couple weeks from the sub-250K levels we had seen, is still squarely within the 250-275K range consistent with a healthy U.S. labor market.

Tomorrow’s non-farm payroll report from the Bureau of Labor Statistics (BLS) is anticipated to show 175K new jobs in the month of October. This is well above the ADP private-sector jobs number released yesterday of 147K, but the BLS number accounts for government payroll jobs as well. Further, although the initial reads between BLS and ADP numbers may be fairly distant from each other, over time they tend to find equilibrium of consensus.

The British pound spiked up overnight following a ruling from a U.K. high court that explicitly says Great Britain’s “Brexit” from the European Union (EU) must first reach official approval by Parliament, and cannot be implemented by decree of Prime Minister Theresa May. Because most analysts in Britain and elsewhere recognize the value of the pound will take a hit once Brexit takes place, decisions like this one that hinder the progress of the decoupling provide a boost to the currency.

Mark Vickery
Senior Editor

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