Today, the Bureau of Labor Statistics reported a rise of 266,000 in non-farm employment data for November. Notably, a Reuters poll estimated that non-farm payroll employment data would rise by 180,000. The higher-than-expected non-farm employment data lifted the equity markets today. The unemployment rate fell 3.5%—the lowest level since 1969.
Employment data and Trump’s reelection
The lower unemployment rate could boost President Trump’s reelection chances next year. A Moody Analytics model suggested that the lower unemployment rate, higher equity prices, and consumers’ financial situation are key to President Trump’s reelection. Read Do Analysts See an Easy Win for Trump in 2020 Election? to learn more.
Today, President Trump tweeted, “Stock Markets Up Record Numbers. For this year alone, Dow up 18.65%, S&P up 24.36%, Nasdaq Composite up 29.17%. ‘It’s the economy, stupid.'”
We usually see similar tweets from President Trump. He might have been targeting experts who question whether the US economy’s growth is sustainable. Read Alan Greenspan: Why Is Trump Dead Wrong? to learn more.
On Wednesday, Bloomberg reported a lower approval rating for President Trump than his predecessors at this time in the presidential tenure. His disapproval rating was also higher after 1,048 days in office. As a result, the approval rating could impact President Trump’s reelection chances.
Analyzing payroll and employment data
Although the employment figure was impressive, the job growth rate decreased. In 2018, the average monthly job growth was at 223,000 compared to 180,000 in the first 11 months of 2019. Overall, experts see the longest expansion in US history slowing down. Read Morgan Stanley: Don’t Expect a Rebound in the Market to learn more.
Surprisingly, the US manufacturing sector added 54,000 jobs last month. The US Manufacturing PMI pointed to a different story. General Motors (GM) workers returning from a strike contributed to rising manufacturing jobs. Read Dow Jones: Can Trump Subdue a Santa Claus Rally? to learn more. The US manufacturing PMI contracted between August and November.
Will the trade war get delayed?
Stronger job growth in the US could result in a delay in phase one of the trade deal. President Trump might be more demanding in the trade talks. The strong US economy strengthens his leverage. In fact, news surrounding the trade deal points to a halt in the talks.
We discussed the possible headwinds surrounding the trade deal. Read S&P 500: Could December Outlook Be Like 2018? to learn more. If the current momentum continues in the job growth, President Trump could win the 2020 election without a trade deal.
At the same time, China’s economy has shown signs of bottoming out. To learn more, read China Manufacturing PMI Spikes amid Trade Deal Hopes.
Dow and moving averages
The Dow Jones Industrial Average (DIA) rose by nearly 300 points after the employment data. Notably, a stronger labor market helped the Dow move above the 20-DMA (day moving average). If the Dow stays above the 20-DMA, a short-term rally could be possible. On Monday, the index fell below this short-term moving average.
To know more about macroeconomic updates, read Trump Impeachment: ‘The Democrats Should Apologize’.