Payroll Preview and Tactical Update

Further substantial progress towards the employment mandate and the equity market pullback

November Employment Report Preview

We expect a strong report on Friday morning. We will take the over on payrolls and average hourly earnings and the under on the U3 unemployment and U6 underemployment rates.

The demand for labor remains strong as evidenced by the November Conference Board Survey. The percent of respondents characterizing jobs as plentiful hit an all-time record of 58% from 54.8% in October. Those describing jobs as hard to get remained close to historical lows at 11.1%, the combination pushed the labor differential (plentiful less hard to get) to an all-time-high of 46.9%, above the previous peak in July 2000 of 46.9%. This level correlates to a U3 unemployment rate of 4.2% and a U6 underemployment rate of 7.8%, in October these rates were 4.6% and 8.3%. Consequently, as has generally been the case this year, these rates are likely to fall more than expected.