The US economy is certainly in a period of rude health at present and on Friday, we saw further evidence of this. Non-farm payrolls showed that a whopping 250,000 jobs were added in October – a significant leap from a downwardly revised 118,000 the previous month. The markets had been expecting a reading of 190,000 so it is fair to say the release absolutely smashed forecasts.
It will serve to convince investors that a December rate hike will go ahead, with talk of a further three rises throughout 2019. That would put US interest rates way above the UK and eurozone which is important for several reasons, but one in particular is interesting: should the global economy go south, the Federal Reserve have plenty of breathing room to stimulate the economy, but the same cannot be said for the central banks in the UK and eurozone. Of course, that’s not to say the economy will go south, but certainly worth considering given what a bolt from the blue the last financial crash was.
It’s relatively busy in the US today, with composite and services PMI for October set for release. We will also see the non-manufacturing PMI reading for last month, which is expected to drop to 60.0 from 61.6, but given that any figure above 50.0 shows growth, if the release falls in line with expectations, it will be extremely positive.
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