NonFarm Payrolls


US labor market remains hot in March, hurting June rate cut odds

US jobs report post-release checklist – April 5

NFP Actual, Consensus and Deviation Positive Nonfarm payrolls increased by 303,000 in March, well above expectations of 200,000 and accelerating from the 270,000 jobs created in February.
NFP Revisions Positive Revisions for both January and February show that employment in these two months combined was 22,000 higher than previously reported.
Unemployment rate Positive The Unemployment Rate fell to 3.8% in March from 3.9% in February, while economists expected it would remained unchanged.
Labor Force Participation Rate Positive The labor force participation rate increased to 62.7% from 62.5% a month earlier, meaning that more people are coming back to the labor market from inactivity.
Average Hourly Earnings Neutral Wage growth in March came in exactly as expected by economists. Average Hourly Earnings rose 0.3% on month, accelerating from the 0.2% rise seen in February, while earnings grew 4.1% on year, down from 4.3% in February.

 

US jobs report pre-release checklist – April 5

Previous Non-Farm Payrolls  PositiveNonfarm payrolls increased by 275,000 in February, higher than the 200,000 expected by markets.
Challenger Job Cuts NegativeUS employers announced 90,309 job cuts in March, up 7% from February and broadly the same level compared with the same month a year ago.
Initial Jobless Claims   NeutralThe number of people filing for unemployment benefits for the first time has increased slightly in March but remained low by historical standards. The 4-week moving average until March 29 was at 214,250, up somewhat from the 212,250 4-week moving average until February 23.
Continuing Jobless Claims  PositiveThe overall number of people in the US collecting unemployment benefits dropped by 19,000 to 1.791 million during the week ending March 23.
ISM Services PMI  NeutralISM Services PMI data for March showed the headline PMI falling more than expected, but still in expansion territory. Meanwhile, the employment subcomponent increased slightly to 48.5, but continued to signal that companies on average shed jobs over the month.
ISM Manufacturing PMI   PositiveThe headline Manufacturing PMI swung to expansion for the first time in 16 months. The employment index continued to indicate job cuts, but at a slower pace than a month earlier.
University of Michigan Consumer Confidence Index  NeutralThe University of Michigan Consumer Sentiment index for March showed a slight improvement in sentiment, albeit only marginal, as consumers were broadly optimistic that inflation will continue to soften.
Conference Board Consumer Confidence Index  NeutralThe Conference Board Consumer Confidence Index was broadly unchanged in March. When assessing the labor market, consumers’ views of the current conditions improved but their short-term expectations deteriorated.
ADP Employment Report  PositiveADP’s gauge of private-sector employment increased by 184,000 in March, beating expectations of a 148,000 rise and accelerating from February’s 155,000 increase.
JOLTS Job Openings  NeutralJob openings in the US increased slightly in February to 8.756 million, remaining well above pre-pandemic levels. Still, the data is lagging as the NFP report is for March and the latest job openings data refers to February.

 

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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.