ADP Quick Analysis: Eight years of job gains vanished, official NFP could tank stocks, boost dollar
|- ADP Non-Farm Payrolls have shown a loss of 20.236 million private-sector jobs in April.
- Together with revisions, coronavirus has cost America close to 20.4 million positions.
- Retail investors may react negatively to Non-Farm Payrolls, pushing the dollar higher.
Around 20,236 million private-sector jobs vanished in April – and that is only in the private sector, and only through the middle of the month, when the survey was taken. Adding a downward revision for March, from -27K to -149K, the total loss stands at around 20.385 million.
These are horrible figures, which will only worsen with revisions for April. Even with some states reopening, May will probably see positions also destroyed in the current month. To put things into proportion, monthly gains in jobs stood at around 200,000 for several years. Around eight years of increases in employment disappeared
The reaction in financial markets is limited, especially as some estimates stood at -21 million while others were closer to -20 million. Yet that may change soon.
Retail traders may panic in response to Friday's figures.
Markets were bracing themselves for a horrible figure, as expectations of -20.050 million have shown, and the reaction has not been earth-shattering so far. Institutional investors are also aware that ADP's statistics do not often correlate with the official Non-Farm Payrolls figures published by the Bureau of Labor Statistics.
What can we expect for the NFP? The same seasoned investors may brace for bad news and not rush to sell. However, retail traders could be shocked by headlines focusing on the total job losses – for both March and April. That may trigger a broader sell-off in stocks.
Moreover, the weight of retail traders has risen with the coronavirus crisis. The combination of high volatility and more spare time has pushed people to open trading accounts, as RobinHood usage recently showed. If these newcomers panic, they could have a significant impact, triggering stop-loss orders.
A sell-off in shares and a general risk-off environment may send everybody to the safe-haven dollar, with the yen also potentially coming under attack.
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