NonFarm Payrolls

February US Jobs report

NFP Analysis: Disappointing wages unlikely to prevent Powell from a dot-plot upgrade

In theory, wages are more important than job gains at this point in the economic cycle and the US Dollar is indeed slightly weaker. However, the falls are small and trading is choppy. What is going on? While wages are very important, the gain in jobs is huge. When coupled with a rise in the working week to 34.5 hours, better than expected, things do not look that bad, at least for stocks. More Americans are working longer hours but at lower pay.

Post-NFP: slack in the economy may take longer to sort out

The focus of the market will remain on the global economy after Friday’s release of US jobs data smashed expectations as employment grew by a solid 313 thousand, which was the strongest showing in 18 months. Average hourly earnings however grew only modestly, up 0.1% month-over-month. But this was excellent news for equities as it helped to keep the prospects of even quicker rate rises in check...

US jobs report post-release checklist – March 9th, 2018

NFP Actual, Consensus and Deviation Positive313k versus 200k expected (deviation +2.07).
NFP Revisions PositiveRevised upwards from 200k to 239k.
Unemployment Rate Neutral4.1%. It failed to improve although it was expected to drop slightly (4.0%)
Labor Force Participation Rate PositiveIncreases to 63.0% from 62.7% equal last month surprising the expectations at 62.8% 
Average Hourly Earnings Negative0.1% decrease versus 0.2% expected

March NFP Shock Resilience

During the previous U.S. Employment Report release, even the minimum average spreads went as high as 1, or even more. Some brokers simply "stepped aside" and quoted a 10+ pips spread. Also spreads recover relatively fast to normal levels when compared to earlier NFP events.

US jobs report pre-release checklist – March 9th, 2018

Previous Non-Farm Payrolls Positive200k versus 180k expected, but with little surprise (deviation was 0.41).
Challenger Job CutsPositiveThe number of corporate layoffs fell in February from 44.6k down to 35.4k  
Initial Jobless Claims NegativeThe first-time claims for unemployment ticked up last week, with the 231k headline number overcoming the 220k expectations and also last week's figure (210k) 
Continuing Jobless Claims PositiveThe number of individuals currently receiving unemployment benefits last week diminished from 1.934M to 1.870M, better than the 1.921M expected.
ISM Non-Manufacturing PMI NegativeThe Employment Index registered 55%, which reflects a decrease of 6.6 percentage points when compared to the Jan reading of 61.6%.
ISM Manufacturing PMI Positive
The Employment Index registered 59.7% in Feb, an increase of 5.5 percentage points when compared to the Jan reading of 54.2%.
University of Michigan Consumer Confidence Index PositiveThe Index increased in Feb, standing now at 130.8 (1985=100), up from  124.3 in Jan.
Conference Board Consumer Confidence Index PositiveThe Index increased in January, following a decline in December, 125.4 up from 123.1.
ADP Employment Report PositiveADP Employment Change for Feb came better than expected at 235K vs. consensus (195K). Prior release was revised up from 234K to 244K.
JOLTS Job Openings NegativeThe number of job openings droped to 5.811 million.

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Crash Course to Become an NFP Expert

Have you ever read news updates mentioning rising unemployment or falling payrolls yet you don’t have a clue what these mean for the Forex market?

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 an history of rocking global markets, especially the FX market via the U.S. Dollar. Other signs of economic growth are often viewed with a little suspicion by market participants if employment figures are not at a healthy level.

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.

To accomplish that, you should start with a solid understanding of employment conditions in the U.S. The more knowledge you have, the more confident you will feel trading the NFP. Making your own predictions, you don’t need to accept the market estimates as written in stone anymore. Besides, they are often well off the mark.

Ready to make a leap and become an NFP expert?


The Nonfarm Payrolls 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.

This report, because of its importance to the reserve currency, tends to move all markets: currencies, equities, treasuries, interest rates, and commodities. It does so immediately after the release of the economic data and sometimes 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.

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