NFP leading indicators: Balanced picture ahead of April's US jobs report

Our NFP leading indicators show a mixed picture ahead of April's US jobs report, failing to provide a strong trading signal
ADP Employment Report provided the most positive signal, but weak Jobless Claims and manufacturing employment data balance it out

Jordi Martínez FXStreet

April's US jobs' report is coming out on Friday at 12.30 GMT and traders are looking for clues ahead of it. After an up-and-down sequence in the last two releases, the US labor market is forecasted to be back on the stable but positive trend that has been carrying for the better part of the last decade. Headline Non-Farm Payrolls report is expected to come out with 185K new jobs added, while Unemployment Rate should be stable at record 3.8% lows and Average Hourly Earnings are forecasted to be ticking up 3.3% year-over-year and 0.3% month-over-month.

That would paint a positive labor market picture that would help the Federal Reserve avoid the interest rate cut talk that has been getting around for the last weeks. But surprises might be on the way and we are looking at the regular NFP leading indicators for clues to trade the event.

Now complete, our NFP pre-release checklist shows a mixed balance of positive and negative signals from the leading indicators released prior to the US jobs report.

On the positive side, we have the previous NFP figures, which showed a good bounce back, plus the really positive ADP Employment report (+275k in April), regularly the indicator better correlated to the NFP headline figure, as our Senior Analyst Joseph Trevisani explained earlier this week. The reduction in the Challenger Job Cuts and the healthy increase in the CB Consumer Confidence Index also point to a good labor market situation. The positive signal from the ISM Non-Manufacturing Employment Index is much weaker, as it comes from a couple of months ago. April's report will not be released until 90 minutes after the jobs' report.

But not everything has come out on the green side, as we have seen both Initial (230K) and Continuing (1.671M) Jobless Claims rise during the last couple of weeks above their expected figures. And, as reported earlier in the week, the ISM Manufacturing Employment Index and the UMich Consumer Confidence Index also provided negative signals.

All in all, these leading indicators put together the following checklist, which is mixed and quite average, so we probably should not expect big outlier figures on this month's labor market indicators, thus expecting fewer fireworks in the markets. Check it out:

Previous Non-Farm Payrolls	Positive	NFP headline and revision numbers showed moderate progress.
Challenger Job Cuts	Positive	Corporate layoffs retraced in April from 60.587K back to 40.023K, which should signal an improvement in the labor market.
Initial Jobless Claims	Negative	The first-time claims have increased in the last two weeks, back above the 200K reference mark.
Continuing Jobless Claims	Negative	The number of individuals currently unemployed has been trending up for the last couple of weeks, now at 1.671M.
ISM Non-Manufacturing PMI	Positive	ISM’s non-manufacturing employment sub-component increased 0.7% from the Feb reading of 55.2%.
ISM Manufacturing PMI	Negative	ISM’s manufacturing employment sub-component decreased to 52.4% from the Mar reading of 57.5%.
University of Michigan Consumer Confidence Index	Negative	Retracing a bit from 98.4 to 97.2. Consumer confidence in the UMich survey dipping after the bounce seen after the US government shutdown ended.
Conference Board Consumer Confidence Index	Positive	Consumer optimism showing great progress in the CB survey, with a rise to 129.2 in April from the 124.2 seen in March.
ADP Employment Report	Positive	Showing a very positive trend by adding an estimate of 275K jobs.
JOLTS Job Openings	Negative	Job openings abruptly halted their positive trend with a pronounced dip in February.

This fundamental analysis article is based on our NFP crash course to become an NFP expert. Its "modelling on related macro-economic data will enable you to elaborate a fundamental analysis to estimate the next NFP release".

Author

Jordi Martínez

FXStreet

Jordi Martínez is the Editor in Chief at FXStreet, leading editorial operations at the company, before being promoted to the role in 2023, he worked in several editorial positions at FXStreet, including roles as Senior Editor and

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.