Private nonfarm payrolls in the US are projected to increase by 214,000 (seasonally adjusted) in tomorrow’s December report from the Labor Department, based on The Capital Spectator’s average point forecast for several econometric estimates. The prediction represents a moderately higher gain vs. the previous monthly increase.
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A bearish aura weighs on US stocks in the trading so far for 2016, but today’s numbers on jobless claims offers another dose of upbeat news for the labor market. In addition, outplacement consultancy Challenger, Gray & Christmas today reports that US employers laid off fewer works last month—the lowest amount, in fact, since 2000. The two releases follow yesterday’s upbeat estimate on private payrolls for December via ADP’s calculations. In other words, the statistical clues seem be lining up for a decent employment report for December in tomorrow’s official estimate from Washington.
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Dennis Gartman thinks we’re in one. UBS strategists also see elevated risk of a new bear market. Unfortunately, there’s econometric support for the negative outlook via a Hidden Markov model (HMM), which has proven to be a relatively reliable metric for monitoring regime shift in the market in real time.
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● US private sector adds most jobs in a year in Dec: ADP | Reuters
● Growth of US services sector slows in December | USN&WR
● US factory orders slip 0.2% in Nov | MarketWatch
● US Job Creation Strong, but Down Slightly at End of 2015 | Gallup
● US Foreign Trade Deficit Narrowed in November | ABA
● World Bank Cuts Global Growth Forecasts | Bloomberg
● China stock trading abruptly halted after 7% plunge | CNN
● Global Composite PMI: growth slows as downturn in emg mkts continues | Markit

The pace of hiring at US companies picked up last month, according to the ADP Employment Report. Private payrolls increased by 257,000 in December in seasonally adjusted terms—beating the consensus forecast by a wide margin and delivering the strongest monthly gain in a year for this series. The surprisingly good news provides some relief after several days of discouraging economic updates.
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The Atlanta Fed’s widely followed GDPNow model kicked off the new year with a hefty downgrade for fourth-quarter growth expectations. Deutsche Bank jumped on the pessimism bandwagon on Tuesday. Adding to the gloom is yesterday’s numbers on auto sales for December and Monday’s weak data on manufacturing for 2015’s end. Is it time to throw in the towel for projecting US growth? No pressure, but today’s ADP Employment Report for December could drop a crucial clue.
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● US auto sales fell sharply in Dec but set 2015 record | Reuters
● PMI: Eurozone economic growth hits 4-1/2 year high in Q4:2015| Markit
● Caixin China Composite PMI dips below neutral 50 level in Dec | Markit
● Dragon Tail Risk for World Economy on Higher Fear of China Slump | Bloomberg
● North Korea’s claims it tested a hydrogen bomb | WaPo

Private nonfarm payrolls in the US are projected to increase by 212,000 (seasonally adjusted) in December over the previous month in tomorrow’s update of the ADP Employment Report, based on The Capital Spectator’s average point forecast for several econometric estimates. The average projection reflects a slightly lesser rise vs. November’s increase.
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The expected risk premium for the Global Market Index (GMI) continued to slide in December. GMI — an unmanaged, market-value weighted mix of the major asset classes — is projected to earn an annualized 2.9% return over the “risk-free” rate in the long term–a conspicuously modest performance relative to recent years. (For details on the equilibrium-based methodology that’s used to generate the forecasts each month, see the summary below). Today’s revised estimate, which is based on data through last month, fell a relatively sharp 40 basis points from the previous month’s update.
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Yesterday’s news that the ISM Manufacturing dipped a bit deeper into the red zone in December raised new questions about the strength of the US economy. This widely followed benchmark fell to 48.2 from 48.6 in November. The slide marks the second straight month of below-50 readings, which indicates contraction. US manufacturing activity, in other words, is stumbling along at the weakest pace in six years.
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