NonFarm Payrolls


August jobs report confirms worsening conditions in the US labor market

US jobs report post-release checklist – September 6

NFP Actual, Consensus and Deviation Neutral Nonfarm Payrolls increased by 142,000 in August, less than the 160,000 expected by markets. Still, hiring accelerated compared to the previous month, when 89,000 jobs were added.
NFP Revisions Negative Both the data for June and July were downwardly revised. When combined, employment is 86,000 lower than previously estimated.
Unemployment rate Neutral The US unemployment rate declined to 4.2% from 4.3% a month earlier, as expected.
Labor Force Participation Rate Neutral The labor force participation rate remained at 62.7% in August.
Average Hourly Earnings Positive Wages rose at a higher-than-expected pace of 3.8% in August on year, accelerating from the 3.6% increase seen in July.

 

US jobs report pre-release checklist – September 6

Previous Non-Farm Payrolls  NegativeUS Nonfarm Payrolls rose by 114,000 in July, falling short of the market expectation of 175,000 and below June’s increase of 179,000.
Challenger Job Cuts NegativeUS-based employers announced 75,891 cuts in August, tripling from the 25,885 cuts announced one month earlier. Job cuts were 1% higher compared to the same month a year ago.
Initial Jobless Claims   PositiveThe number of people claiming unemployment benefits for the first time stood at 230,000 (four-week average until August 30). This is the lowest level in around three months.
Continuing Jobless Claims   PositiveContinuing Claims fell to 1.853 million in the week ending August 24 (four-week average).
ISM Services PMI  NeutralEconomic activity in the US services sector expanded for the second consecutive month in August. Still, the employment subcomponent signaled that firms barely added jobs over the month.
ISM Manufacturing PMI   NegativeThe ISM manufacturing PMI for August came in beneath expectations at 47.2, which was only a modest pickup from July. The employment subcomponent did pick up from a four-year low of 43.4 to 46.0, but this is still low and suggested that on average factories shed jobs over the month.
University of Michigan Consumer Confidence Index  PositiveThe University of Michigan Consumer Sentiment Index increased in August after four months declining. Both short and long-term expectations about economic conditions reached their highest levels since April.
Conference Board Consumer Confidence Index  NeutralThe Conference Board Consumer Confidence index rose in August, but Americans said they were more concerned about the current and future labor market conditions.
ADP Employment Report  NegativePrivate-sector employment rose by 99,000 in August, the lowest figure since January 2021 and well below the 145,000 expected.
JOLTS Job Openings  NeutralJOLTS Job Openings fell to a three-and-a-half-year low of 7.673 million in July, below the 8.1 million expected, in a sign that the labour market was weakening faster than previously thought. Still, the data refers to July, and the NFP data is for August.

 

July US JOBS REPORT REVIEW


June US JOBS REPORT REVIEW


May US JOBS REPORT REVIEW




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BIG PICTURE

The NFP report: The most important economic indicator for the US

NFP Definition

NonFarm Payrolls report measures the number of jobs added or lost in the US economy over the last month. It is released usually on the first Friday of each month, at 8:30 EST. It is published by the US Department of Labor.

This report is important because the US is the largest economy in the world and its currency (US Dollar) is the global reserve currency. The many economies peg (tie) their currency's value to the reserve currency, many commodities such as gold and oil are priced in terms of the reserve currency and the local economy's debt is priced in terms of its own currency.

The NFP report, because of its importance to the reserve currency, tends to move all markets: currencies, equities, treasuries, interest rates and also commodities. It does it so immediately after the release of the economic data and sometimes so dramatically.

US Departament of Labor

The mission of the DOL is to assure the prosperity of the wage earners, job seekers which includes more than 10 million employers and 125 million workers in the USA. 180 federal laws and several federal regulations are the key of the Departament Labor promotion of benefits and rights.

To Trade...

Those who advocate trading NFP releases base their advice on a previous preparation and some fundamental research. The elaboration of some macroeconomical analysis is essential for successful trading.

This research includes averages of past headline NFP numbers, Weekly Jobless Claims, ISM Industry Data reports or other employment reports as the ADP or the Challenger. Tracking these events is fundamental on the preparation of the trades to set up just after the release. You can check all this data on FXStreet Economic Calendar: ADP Report, Initial Jobless Claims, ISM Industry Data.

... Or Not to Trade

A lot more skeptical on the benefits of trading the event, as you can read in his article “Step aside the NonFarm Payrolls release”, Adrián Aquaro, President at Trader College, says its importance has decreased a little bit lately:

“Even if the impact has diminished gradually over time, still generates huge attention on the markets and it normally drives important monthly trends. Lately another event (the Fed Monetary Policy Meetings) has been driving similar attention, thanks mainly to the Interest Rates being at 0%.”

What is a NonFarm Payrolls Forecast?

A NonFarm Payrolls Forecast is some sentiment-based piece of content that tries to predict what the NFP numbers will be and what impact will they have on the markets. In this page, you'll find some articles and tools that will help you to understand which could be the outlook for ADP Report, Unemployment Rate, Average Hourly Earnings, Labor Force Participation Rate and some other important economic indicators.

The ADP (National Employment Report) is an estimation of nonfarm employment which is based on a survey of thousands of private sector businesses. One of the biggest differences between NFP data and ADP data is the sample and methodology of the study. ADP Jobs Report could show us an anticipation of the NFP's trends. Some outlooks are mainly based on the Jobs Report, in past data and in other related job indicators like Initial/Continuing Jobless Claims.