Auto Industry: Analyzing Non-Farm Payroll Data for November



November 2017 non-farm payrolls

The NFP (non-farm payroll) data show the number of jobs lost and added each month in the US. The employment summary for November 2017 was released by the U.S. Bureau of Labor Statistics on December 8. The NFP change figure for the month stood at 228,000—much higher than the market’s expectation of 185,000.

On the day of the November data release, October’s NFP change of 261,000 was revised downward to 244,000, which added pessimism.

Non-seasonally adjusted data

On a non-seasonally adjusted basis, the NFP data for November 2017 stood at 148,507—higher than 146,393 in November 2016 and 147,975 in October 2017. Last month, employment opportunities continued to grow in sectors like manufacturing, healthcare, and construction. In contrast, no major employment changes were seen in sectors like leisure and hospitality, financial activities, and mining.

Possible impact on the auto industry

For the auto industry, NFP data act as one of the key indicators. Consistent and healthy growth in the country’s employment along with rising wages could boost consumers’ purchasing power with a higher disposable income. In general, higher disposable income encourages more people to buy expensive consumer goods like cars and trucks.

In November 2017, the US non-seasonally adjusted NFP data showed improvements. Overall, a continued uptrend in NFP data could be positive for US auto demand.

Mainstream automakers (XLY) like Ford (F), General Motors (GM), Toyota (TM), and Fiat Chrysler (FCAU) generate a large portion of their revenues from the US market. Therefore, positive US auto demand growth could help these automakers grow their business.

In the next part, we’ll discuss how the recent trend in the US dollar could help US automakers improve their profitability.

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