Advertisement
Advertisement

ADP Jobs Data Comes in Below Expectations, Crude Oil Data Mixed

By:
James Hyerczyk
Updated: Jan 5, 2017, 22:40 UTC

U.S. Economic data was mixed on Thursday with U.S. weekly jobless claims falling to a 43-year low last week, but data from payrolls processor ADP showing

ADP Report

U.S. Economic data was mixed on Thursday with U.S. weekly jobless claims falling to a 43-year low last week, but data from payrolls processor ADP showing the private sector added fewer jobs than estimated. Other data included the December IHS Markit Services PMI and the ISM Non-manufacturing Index.

ADP said private employers added 153,000 jobs last month, well below the 170,000 estimate. Weekly jobless claims came in at 235,000, under the consensus estimate of 262,000. Trader reaction was mixed because some read this as slow, but steady job growth and others saw the ADP number as a sign of weakness. This report is often used as a precursor to Friday’s U.S. Non-Farm Payrolls report.

The December IHS Markit services PMI came in at 53.9, higher than the 53.4 estimate, but below the previous read. ISM Non-Manufacturing PMI was 57.2, the same as the previous, but above the estimate.

On Friday, investors will get the opportunity to react to the latest U.S. Non-Farm Payrolls report at 1330 GMT. Early estimates show that the U.S. economy may have added 178,000 jobs in December. The Unemployment Rate is expected to come in at 4.7%, higher than the previous 4.6%. Average Hourly Earnings are expected to rise 0.3%, better than the previous minus 0.1%.

The report is important because labor is a key component in the Fed’s decision to raise interest rates.

Energy

The crude oil market posted a two-sided trade on Thursday before moving higher. Two factors contributed to the choppy, but better price action. Firstly, the market was underpinned by news that Saudi Arabia had cut production to meet OPEC’s agreement to cut output. According to a Gulf source, Saudi Arabia cut oil output in January by at least 486,000 barrels a day to 10.06 million barrels. This puts it in compliance with the agreement reached at the end of November to reduce output in an attempt to trim the global supply surplus and stabilize prices.

Secondly, traders responded to government data that showed a surprisingly large increase in U.S. gasoline and distillate inventories.

The government data caused prices to decline, but the news about Saudi Arabia brought prices back up again.

According to the U.S. Energy Information Administration, U.S. crude inventories fell sharply by 7.1 million barrels in the week ending December 30. Traders were looking for a decline of about 2.2 million barrels. The EIA said the drawdown was caused by a hike in refinery output.

While the crude oil number may have been bullish, gains were capped by a surge in gasoline and distillates. Gasoline stocks rose by 8.3 million barrels. Traders were looking for a 1.8 million-barrel gain. Distillates rose by 10.1 million versus expectations for a 1.1 million-barrel increase.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?

Advertisement