Chart of the Week: US Employment Growth in Cyclical Sectors

• Employment growth in construction is standing at 1.4% YoY, which is close to its lowest level since 2012;
• Employment growth in temporary help services is in contraction, at minus 0.1%, the weakest since the end of 2016.

It is too early to talk about risk of contagion to other sectors and our view is still that the US labor market remains well-oriented in the short and medium term, despite the impact of the trade war and China’s slowdown.

Week ahead

Nov. 5: RBA to hold rates at 0.75%.

Nov. 6: Macron-Xi formal meeting. One of the main goals of Macron’s trip is to increase French agricultural exports to China. In other news, the Bank of Thailand may cut rates by 25bps to 1.25% as the THB real effective exchange rate is way too strong.

Nov. 7 to Nov. 20: Privatization of France’s national lottery games (FDJ, for Française des Jeux). It is part of the so called Pacte law aimed to privatize some key French entities and increase business growth and transformation of companies to face international competition. The FDJ is a very profitable company: revenue increased by an average of 5% over the past 25 years and, last year, it distributed 130 million euros in dividends. The French government’s purpose is to reduce its stake in the company from 72% to around 20%. It is considered by investors as the privatization of the year for the French stock market.

Nov. 11: General election in Spain. The most recent polls indicate there is no clear coalition emerging. The PSOE is still leading the polls, but support in its favor is slightly declining to levels close to April election, whereas the PP is gaining more support. Podemos is stable. As of now, the only viable coalition would be a grand coalition gathering the PSOE and the PP, which would be a first in Spain’s history.