The world's largest economy gained 128,000 jobs in October, better than 89,000 projected. Low estimated is the result of the strike at General Motors, which caused a significant drop in manufacturing jobs. The best news come from the revisions – October's gains come on top of 95,000 job gains previously unaccounted for in the previous two months. The US labor market is alive and kicking.
US economy added 128,000 jobs in October, beating the 89,000 forecast. Positive revisions to August and September totaled 95,000. General Motors strike subtracted between 46,000 and 80,000 from payrolls. The US economy has turned in another bang-up employment report. Belying estimates of the first sub-100,000 report since May and rumours of a negative number US firms added 128,000 workers in October.
US jobs report post-release checklist – Nov 1st, 2019
|NFP Actual, Consensus and Deviation||Positive||Headline number at 128k, better than 89k expected.|
|NFP Revisions||Positive||Positive revision for the September figure, 180k instead of 136k.|
|Unemployment rate||Negative||Both U3 (from 3.5% to 3.6%) and U6 (from 6.9% to 7%) figures went up.|
|Labor Force Participation Rate||Positive||Rose a bit, from 63.2% to 63.3%.|
|Average Hourly Earnings||Positive||The YoY number remained stable at 3% and the MoM from 0% to 0.2%.|
US jobs report pre-release checklist – Nov 1st, 2019
|Previous Non-Farm Payrolls||Negative||Headline number at 136k disappointed, showing a smaller increase than expected (145k).|
|Challenger Job Cuts||Negative||The number of corporate layoffs went up in October, as it printed 50.275K job cuts (41.557K in September). This indicator has been ranging on the 35K-55K for the last five months.|
|Initial Jobless Claims||Neutral||The number of people filing first-time claims for unemployment insurance is showing minimal variations, stuck between 200K and 220K for the last eleven weeks.|
|Continuing Jobless Claims||Neutral||The amount of people receiving unemployment benefits is stuck between 1.65M and 1.7M, very close to all-time lows.|
|ISM Non-Manufacturing PMI||Negative||Employment Index in the very-important US services survey came out at 50.4 in September, a much smaller figure than the 53.1 level seen in August.|
|ISM Manufacturing PMI||Negative||Employment sub-component in the ISM Manufacturing PMI disappointed for the second month in a row, printing a modest 46.3, way into contraction territory.|
|University of Michigan Consumer Confidence Index||Neutral||UMich consumer survey regained the 95 mark in October, but it is still below the highs around the 100 level.|
|Conference Board Consumer Confidence Index||Negative||CB consumer survey showed a small retracement from 126.3 to 125.9, also failing to match the expectations, which were forecasting a surge to the 128 mark.|
|ADP Employment Report||Neutral||The US private employment report slightly beat estimates with a 125K job addition in October, but September figure was revised down to 93K. It's still a slowdown.|
|JOLTS Job Openings||Negative||Job openings fell below expectations in August, printing 7.051 million labor vacancies, the fourth consecutive month with a fall in the number.|
November US JOBS REPORT pREVIEW
The US will release October inflation data this Friday, and signs ahead of it are not good. The Nonfarm Payroll report is expected to show that the country has added 85K new jobs in the month, below the previous 136K. The unemployment rate is seen ticking higher from 3.5% to 3.6%, while average hourly earnings are seen up by 0.3% monthly basis and by 3.o% when compared to a year earlier.
Non-farm payrolls are projected to add 85,000 in October after September’s 136,000 gain. The unemployment rate is expected to rise 0.1% to 3.6%. Average hourly earnings will climb 0.3% on the month and 3.0% on the year after no monthly gain in September and a 2.9% annual increase. The labor force participation rate will remain at 63.2%. Average weekly hours will be unchanged at 34.4%.
October US JOBS REPORT REVIEW
The US economy gained more jobs than some had feared. Upward revisions added a hefty 45,000 jobs in previous months. Census hiring was a meager 1,000 jobs – with robust private-sector hiring. The underemployment level significantly dropped, a positive for the Fed. September's Non-Farm Payrolls report is a ray of sunshine after a week packed with doom and gloom.
The US economy continued to produce jobs at a healthy rate as unemployment fell to a five decade low and wage growth slowed unexpectedly. Unemployment dropped 0.2% to 3.5% as the economy created 136,000 new jobs in September and added 45,000 in prior months, reported the Bureau of Labor Statistics on Friday. Annual wages rose 2.9% and the jobless rates for Hispanics and African-Americans registered all-time lows. Consensus estimates had been for payrolls of 145,000.
September US JOBS REPORT REVIEW
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.
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.
GBP/USD has leaped above 1.29, the highest since early November, as the Brexit Party has failed to field candidates in 43 additional seats, facilitating a victory for PM Boris Johnson.
EUR/USD is trading closer to 1.1050, up on the day. US Commerce Secretary Ross has expressed optimism about reaching a deal with China. The Retail Sales Control Group met expectations with 0.3%.
The USD/JPY pair maintained its strong bid tone near session tops and had a rather muted reaction to the mixed US economic data.
The public phase of the impeachment hearings against President Donald Trump has kicked off, with the US public and parties divided more than ever. How does it affect markets?
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.