US Employment Data

Today we have US Average Hourly Earnings m/m, Non-Farm Employment Change and Unemployment Rate releases at 12.30pm GMT. 

Payrolls are expected to rise by 205K for March, below last months reading of 242K yet still above the significant 200K level. The unemployment rate is expected to hold at a very low 4.9%. Particular focus will be paid to hourly earnings given its influence on inflation, this is expected to rise to 0.2% from last months disappointing reading of -0.1%.

This week’s ADP report beat expectations printing at 200K, which is a positive sign for the government release. 

Description:

This data release shows three key employment metrics: Non-Farm Employment Change, also known as Non-Farm Payrolls, measures the change in the number of employed people during the previous month, excluding the farming industry. This is vital economic data released shortly after the month ends. The combination of importance and earliness makes for hefty market impacts. Job creation is a leading indicator of consumer spending which accounts for a majority of overall economic activity. The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labour-market conditions. Unemployment is also a major consideration for those steering the country’s monetary policy. Average Hourly Earnings measures the change in the price businesses pay for labour, excluding the farming industry. This is a leading indicator of consumer inflation because when businesses pay more for labor the higher costs are usually passed on to the consumer.

Summary:

USD sentiment has been rather volatile over recent weeks, after Fed Chair Yellen’s comments at the Economic Club of New York this week, sentiment on the USD has once again turned negative. The Fed’s main concern remains low inflation with most Fed members overall satisfied with the state of the US labour market. Nevertheless employment data remains highly influential to the Fed’s decision making process, especially Average Weekly Earnings data which as an underlying factor for inflation has became an increasingly important data point.