The US economy gained 304,000 Non-Farm jobs in January, far above 165K expected or any "whisper" expectations stemming from the upbeat ADP NFP earlier this week. However, it came on top fo a whopping downward revision from 312K to 222K for December, no less than 90K, taking the oomph out of the headline.
FEBRUARY US JOBS REPORT
US jobs report post-release checklist – February 1st, 2019
|NFP Actual, Consensus and Deviation||Positive||Gained +304k.|
|NFP Revisions||Negative||Revised down to 222,000 from 312,000.|
|Unemployment Rate||Positive||Edged up driven by discouraged workers entering the workforce again.|
|Labor Force Participation Rate||Negative||63.2% vs previous 63.1%.|
|Average Hourly Earnings||Positive||Same as expected, a +3.2%.|
Key datapoints: Maximum of max spreads -- Widest spread we have seen: Max min spread in "The Rage" period -- Nobody could keep it tighter than that. Historical comparison: There was hardly any warm-up phase before the event. Max spreads peaked below 10, 2 spikes, lower than usual and settled faster, almost within 5-10 secs. Extremely minor turbulence.
US jobs report pre-release checklist – February 1st, 2019
|Previous Non-Farm Payrolls||Positive||Upward surprise from 177K expected to 312K plus Dec revided 21k higher.|
|Challenger Job Cuts||Positive||After a large jump in layoffs in Dec, a lower number was printed in Jan.|
|Initial Jobless Claims||Positive|
|Continuing Jobless Claims||Positive||A lower reading is seen as positive for the labor market.|
|ISM Non-Manufacturing PMI||Negative||ISM’s employment sub-component decreased 2.1% from the Nov reading of 58.4%.|
|ISM Manufacturing PMI||Negative||ISM’s employment sub-component decreased 2.1% from the Nov reading of 58.4%.|
|University of Michigan Consumer Confidence Index||Negative||Huge drop with a surprise factor of -10.6 on FXStreet's Market Impact scale.|
|Conference Board Consumer Confidence Index||Negative||Declined in Jan, following an decline in Dec.|
|ADP Employment Report||Positive||A higher print, above expected, is a good omen for the NFP.|
|JOLTS Job Openings||Negative||New lows indicates companies posted less job openings.|
JANUARY US JOBS REPORT
The US gained no less than 312K jobs in December, far above 177K or a slightly higher number as the ADP private sector report had suggested. Revisions add another 58K. Moreover, Average Hourly Earnings are up 0.4% MoM, above projections for 0.3%. Year over year, they accelerated to a new cyclical high of 3.2%.
The surge in December hiring with 312,000 workers joining the employed may gain most of the market’s attention but it is the increase in consumption from the wages of those new paychecks that promises the most for the US economy. Annual wages have increased 0.5% since July as labor shortages in many industries have finally induced employers to supplement pay in order to attract workers.
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 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.