NonFarm Payrolls

September jobs data to influence Fed rate cut odds for November

US September Nonfarm Payrolls Preview: Analyzing Gold price reaction to NFP surprises Premium

Eren Sengezer
FXStreet

Historically, how impactful has the US jobs report been on gold’s valuation? In this article, we present results from a study in which we analyzed the XAU/USD pair's reaction to the previous 35 NFP prints*. We present our findings as the US Bureau of Labor Statistics (BLS) gets ready to release the September jobs report on Friday, October 4. Expectations are for a 140,000 rise in Nonfarm Payrolls following the lower-than-expected 142,000 increase recorded in August.

US jobs report pre-release checklist – October 4

Previous Non-Farm Payrolls  NeutralNonfarm Payrolls increased by 142,000 in August, less than the 160,000 expected by markets. Still, hiring accelerated compared to the previous month, when 89,000 jobs were added.
Challenger Job Cuts NeutralUS-based employers announced 72,821 job cuts in September, 4% less compared with those registered a month earlier. Still, the number is 53% higher than the cuts announced in September 2023.
Initial Jobless Claims   PositiveThe number of people claiming unemployment benefits for the first time was at 224,250 (four-week average until September 27), down from the 230,000 four-week average seen at the end of August.
Continuing Jobless Claims   PositiveContinuing Jobless Claims fell to 1.826 million in the week ending September 20, down from 1.845 million a month earlier.
ISM Services PMI  NeutralThe ISM Services PMI came above expectations, suggesting that activity in the sector remained strong. However, the employment subcomponent fell into contraction territory, signaling that on average firms shed jobs.
ISM Manufacturing PMI   NegativeThe ISM manufacturing PMI for September came in below expectations at 47.2, unchanged from August. The employment subcomponent fell further into contraction territory, meaning sharper job losses compared with the previous month.
University of Michigan Consumer Confidence Index  PositiveThe University of Michigan Consumer Sentiment Index increased in September for a second consecutive month. All five index components gained, led by a 6% surge in one-year business expectations.
Conference Board Consumer Confidence Index  NegativeThe Conference Board Consumer Confidence index deteriorated in September as consumers became more pessimistic about the current and future state of the labor market.
ADP Employment Report  PositivePrivate-sector employment rose by 143,000 in September, more than expected and accelerating from the 103,000 gain registered in August.
JOLTS Job Openings  NeutralJOLTS Job Openings unexpectedly rebounded to 8.04 million in August. Still, the data is backward looking as it refers to August and the NFP data is for September.

 

US jobs report post-release checklist – September 6

NFP Actual, Consensus and Deviation Neutral Nonfarm Payrolls increased by 142,000 in August, less than the 160,000 expected by markets. Still, hiring accelerated compared to the previous month, when 89,000 jobs were added.
NFP Revisions Negative Both the data for June and July were downwardly revised. When combined, employment is 86,000 lower than previously estimated.
Unemployment rate Neutral The US unemployment rate declined to 4.2% from 4.3% a month earlier, as expected.
Labor Force Participation Rate Neutral The labor force participation rate remained at 62.7% in August.
Average Hourly Earnings Positive Wages rose at a higher-than-expected pace of 3.8% in August on year, accelerating from the 3.6% increase seen in July.

 

July US JOBS REPORT REVIEW

June US JOBS REPORT REVIEW

May US JOBS REPORT REVIEW

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BIG PICTURE

The NFP report: The most important economic indicator for the US

NFP Definition

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

The mission of the DOL is to assure the prosperity of the wage earners, job seekers which includes more than 10 million employers and 125 million workers in the USA. 180 federal laws and several federal regulations are the key of the Departament Labor promotion of benefits and rights.

To Trade...

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.