America gets an upbeat pay rise – 0.4% on average – better than expected – and significantly above-average increase. On an annual basis, salaries are up 3.2%, also beating projections. Additional disposable income in Americans' pockets may result in further spending in price pressures. An acceleration in wage inflation may push prices higher.
September US JOBS REPORT REVIEW
The US Bureau of Labor Statistics on Friday reported that Nonfarm Payrolls in August increased by 130,000 following July's reading of 159,000 (revised from 164,000) and came in weaker than the market expectation of 158,000. With the initial reaction, the US Dollar Index edged lower and was last down 0.02% on the day at 98.35.
US jobs report post-release checklist – Sep 6th, 2019
|NFP Actual, Consensus and Deviation||Negative||Headline number at 130k disappointed, worse than 158k expected.|
|NFP Revisions||Negative||Slight down revision from 164k to 159k.|
|Unemployment rate||Neutral||Number unchaged.|
|Labor Force Participation Rate||Positive||Continues its upward trend growing from 63% to 63.2%.|
|Average Hourly Earnings||Positive||Both yearly and monthly wage figures beat expectations, with the YoY revision also coming improved.|
US jobs report pre-release checklist – Sep 6th, 2019
|Previous Non-Farm Payrolls||Neutral||Matched expectations at 164K jobs added.|
|Challenger Job Cuts||Negative||Number of corporate layoffs increased notably in August from 38.845K to 53.480K.|
|Initial Jobless Claims||Neutral||4-week average of the first-time unemployment claimants is stable around 215K, very close to multi-year lows.|
|Continuing Jobless Claims||Neutral||Number of people filing for unemployment benefits continues to be quite stable around 1.7 million, also close to multi-year lows.|
|ISM Non-Manufacturing PMI||Negative||The employment subcomponent in the very important service sector survey fell from 56.2 to 53.1.|
|ISM Manufacturing PMI||Negative||Falling from 51.7 in July to 47.4 in August is a big disappointment on the employment subcomponent of the very important manufacturing business survey.|
|University of Michigan Consumer Confidence Index||Negative||UMich consumer survey plunged below 90 in August, falling nearly 10 points in one month, an awful reading.|
|Conference Board Consumer Confidence Index||Positive||The Conference Board Consumer Confidence Index® stayed at higher-than-135 levels in August, a better-than-expected number.|
|ADP Employment Report||Positive||Private employment report showed a pick up on job creation in August, adding 195K (much better than 149K expected).|
|JOLTS Job Openings||Positive||Job openings beat expectations in June, printing 7.348 million above the 7.317 million expected. Revised figure for May was also bullish.|
AUGUST US JOBS REPORT REVIEW
The US economy added 164,000 new workers, 16,000 in manufacturing and annual wage compensation rose 3.2% in July, reported the Labor Department on Friday. The unemployment rate was stable at 3.7% and labor force participation rose to 63.0%.
Overall, nothing has changed. Investors are now looking ahead to Trump's speech on Trade with European Union, in Washington DC. Will the President announce EU auto tariffs? If so, stocks could fall further.
JULY US JOBS REPORT REVIEW
The US economy has gained 224K positions in June, much better than expected. Despite a minor miss in wages, the Federal Reserve has reasons to be cheerful. The greenback may extend its gains as the odds of an easing cycle diminishes.
US jobs report post-release checklist – Jul 5th, 2019
|NFP Actual, Consensus and Deviation||Positive||Beats expectations with 224k, recovering the healthy bigger-than-200k job creation pace.|
|NFP Revisions||Negative||Last month dismal headline report was slightly revised down from 75k to 72k.|
|Unemployment Rate||Negative||Unexpectedly rose a tick from the record-low 3.6% to 3.7%.|
|Labor Force Participation Rate||Positive||Rises a tick from 62.8% to 62.9%, a positive development.|
|Average Hourly Earnings||Negative||Both monthly and yearly figures printed stable wage-growth ratios, unable to rise a tick to 0.3% and 3.2% as expected.|
Job creation in the US returned to form as businesses added 224,000 new positions in June, well above the 160,000 forecast. The best performance since January helped to arrest concerns that the labor economy had begun to cool in line with apparently weaker GDP growth in the second quarter.
The US dollar could extend its gains this week but we can't see how one month of stronger job growth accompanied by no improvement in wage growth can be game changer for the Federal Reserve.
Having spent the day within familiar levels, the EUR/USD pair is once again retreating from the 1.1070/80 resistance area. Dollar in better shape against most major rivals after post-Fed’s correction.
EU’s Juncker said that if the objectives of the backstop are met through alternative arrangements, the backstop won´t be needed, adding that there could be a deal by the October deadline. GBP/USD hits fresh 7-week highs in the 1.2530 region.
The USD/JPY pair rose to its highest level since early August at 108.48 during the American trading hours on Wednesday after the Federal Reserve refrained from giving any hints regarding the next policy move despite announcing a 25 basis points rate cut.
Precious metals were higher on Thursday. Gold prices climbed from $1,489.13 to $1,504.60. The gold ratio travelled between 83.87 and 84.66 with a bullish bias as the yellow metal surges on.
The NFP report: The most important economic indicator for the US
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
During NFP data release, spreads first fall apart and recover slowly afterwards as market calms down.
The Non Farm Payrolls report is arguably one of biggest market movers in the Forex. Since the NFP report is scheduled this coming week, I thought it would be good for us to take a closer look at this fundamental giant.
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.