Wages were supposed to be the focus. They rose by 2.7% YoY and 0.3% MoM precisely as expected. That left the scene to the headline figure, which came out at 157,000, significantly worse than 190,00 officially expected and was probably higher after the ADP NFP.
AUGUST US JOBS REPORT
US jobs report post-release checklist – August 3rd, 2018
|NFP Actual, Consensus and Deviation||Negative||Negative surprise from 190K |
|NFP Revisions||Positive||Revised up from 213K to 248K.|
|Unemployment Rate||Positive||Goes down again, from 4.0% to 3.9% as expected.|
|Labor Force Participation Rate||Negative||Stays at 62.9% despite expectations had it rising to 63.0%.|
|Average Hourly Earnings||Neutral||Stay at 2.7% as expected.|
As we noted yesterday ahead of today’s NFP release, “[There have been] no signs that a pickup in price pressures is imminent, [and therefore] the Federal Reserve is content to stick with its gradual, every-other-meeting rate hike schedule…”. Today’s US jobs report will do little to blow the Fed off course. Tackling the headlines first, overall job creation came in lower than expected, with the BLS estimating that the US economy created only 157k new jobs in July, below economists’ expectations of a 193k increase. That said, revisions to the previous two months’ reports added 59k total jobs, bringing the three-month average of job creation to 224k, above the recent trend level.
No potentially market-moving events are scheduled for the upcoming week. So, markets will take their guidance from this week's releases, possibly enhanced by one tweet or another. Periods like this give us the opportunity to look a bit further ahead, and this outlook shows that the current summer doldrums should be enjoyed. For the autumn, major political events lie ahead, with the potential to move markets.
US jobs report pre-release checklist – August 3rd, 2018
|Previous Non-Farm Payrolls||Positive||Slightly positive surprise from 195K expected the actual result was 213K.|
|Challenger Job Cuts||Positive||The number of corporate job layoffs diminished from 37.2k to 27.122k, a positive sign.|
|Initial Jobless Claims||Positive|
|Continuing Jobless Claims||Positive||Unemployed individuals who are receiving benefits went down to 1.724M from 1.747M of last week.|
|ISM Non-Manufacturing PMI||Negative||The employment sub-index reflects a decrease of 0.5% in June when compared to the May reading.|
|ISM Manufacturing PMI||Positive||ISM’s employment sub-component increased 0.5 when compared to the June reading of 56.0.|
|University of Michigan Consumer Confidence Index||Positive||A higher reading (97.9) indicates consumers are prone to spending more.|
|Conference Board Consumer Confidence Index||Positive||The index increased in July, now standing at 127.4, following a modest decline in June.|
|ADP Employment Report||Positive||Way above expectations (219k, better than 185k expected), with gains in all key sectors.|
|JOLTS Job Openings||Positive||A higher reading at 6.638M indicate companies are posting more job openings.|
JULY US JOBS REPORT
Weak wages stand out in the jobs report and weigh on the US Dollar. The data is good enough for a September hike.
US jobs report post-release checklist – July 6th, 2018
|NFP Actual, Consensus and Deviation||Positive||Slight positive surprise from 195K expected the actual result was 213K.|
|NFP Revisions||Positive||Revised up from 223K to 244K.|
|Unemployment Rate||Negative||An increase from 3.8 to 4.0 (expected was 3.8%) is seen as negative.|
|Labor Force Participation Rate||Positive||Increased from 62.7% to 62.9%.|
|Average Hourly Earnings||Negative||Expected was 2.8% (as previous) but released was 2.7%.|
JUNE US JOBS REPORT
US jobs report post-release checklist – Jun 1st, 2018
|NFP Actual, Consensus and Deviation||Positive||Slightly positive surprise from 188K expected the actual result was 223K.|
|NFP Revisions||Negative||Revised down from 164K to 159K.|
|Unemployment Rate||Positive||A decrease from 3.9 to 3.8 (expected was 3.9%) is seen as positive.|
|Labor Force Participation Rate||Positive||Increased 0.1% to 62.7%.|
|Average Hourly Earnings||Neutral||A print of 2.7% same as expected with no revisions.|
Well, today is your lucky day the FXStreet team has been working on a research material to make you an expert in trading the NFP report.
Considered the backbone of the U.S. economy, the NFP has
Since the headline number for NFP tends to move all financial markets, as a trader it is important that you prepare for various scenarios, by developing models to predict the likely headline number and to trade the outcome.
Ready to make a leap and become an NFP expert?
The Nonfarm Payrolls 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
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.