NFP did a bit better than expected. Even though I do expect payrolls to continue to inch up over time, this is not an inflation generating event. Nevertheless, this is more in line with the rate of growth of the economy than the nearly 300K gain we had last month.

From Bloomberg:

Employers added more jobs than forecast in November, underscoring Federal Reserve Chair Janet Yellen’s confidence that the U.S. economy is strong enough to withstand higher borrowing costs.

The 211,000 increase in payrolls followed a 298,000 gain in October that was bigger than previously estimated, a Labor Department report showed Friday. The median forecast called for a 200,000 advance. The jobless rate held at a more than seven-year low of 5 percent.

Bloomberg consensus is at 200K, model sees 183K for tomorrow. Model sees a continued upward trend in NFP; but nothing out of the ordinary.

Looking at model internals it appears that the economy is growing at trend, but not accelerating. Going by Janet Yellen’s recent comments it is likely the FOMC will raise rates at their upcoming meeting. If they do, it is hard to imagine that they will follow up any time soon.

Just to be clear, this not investment advice. I do not advise you to put on positions in front of the NFP release based on this model.

This is a very strong number. In fact, it is higher than the highest estimate in the Bloomberg survey. In my opinion this print is out of touch with how fast the economy is growing. Current growth is at or below average according to my model. This is corroborated by the Chicago Fed National Activity Index (CFNAI) which was at -.37 in September. In my view the Fed will not move in December. I don’t know what they will do for sure, but I think they will want to err on the side of waiting too long rather moving too soon.

This is right on Bloomberg consensus of 182K. Model sees NFP going higher next year. I don.t think this number is strong enough for the fed to raise rates this year.

The model has been coming below consensus for a few months now. NFP has been printing higher until this morning; we now have a very weak number and a large downward revision to previous months numbers as well.

As far as I can tell there is no reason to expect that NFP numbers will continue to trend lower. However, the economy is not looking strong. Most importantly, the economy is nowhere near a point where it might be overheating. As much as the Fed would like to raise rates, they are still quite far from doing so.

Model is looking for 195K. This is very close to Bloomberg consensus of 201K. Payrolls are on an upward trajectory but nothing that will cause wage inflation.

I seriously doubt that the Fed will be able to raise rates any time soon.

The model is looking for 140K. This is much below Bloomberg consensus of 218K. It is unlikely that we will see a print as low as 140 but the risks are skewed towards a weak number.

Model see 157K print. This is below Bloomberg consensus of 205K. The 12M forward trend is towards continuing improvement.

Given recent market turmoil and weak NFP projections I am not a big believer in a rate hike this year.

Model came in much below actual print this time. This appears to be more of an outlier as the model usually comes in closer. Nevertheless there is always a lot of noise in the NFP number.

The economy is doing well, however, the model is seeing a bit of a softening. This might be a result of uncertainty in Europe, strong dollar, and lower oil prices. The model expects NFP to print at 170K which is much below Bloomberg consensus of 225K. The one year forward projection is still good at 260K. Given these estimates it seems that Federal Reserve will delay any fed funds rate hikes longer than the market currently expects.

I expect that the actual print tomorrow will end up higher than what the model expects given that the model is so far off from consensus; one standard deviation below median consensus would be around 197K. But nevertheless the risks are skewed towards a weak number tomorrow.