NonFarm Payrolls


NFP: August results had a systemically downside bias

NFP

August Non-Farm Payrolls (NFP) surprised on the downside. The US economy added 156K’000 new nonfarm jobs in August versus 180’000 expected by analysts. Last month’s figure has been revised down to 189’000 from 209’000. The unemployment rate increased to 4.4% from 4.3% and the average earnings improved less-than-expected. The US stocks gained after the release, as soft labour data revived dovish Federal Reserve (Fed) speculations.

Post-release checklist (1st September 2017)

Actual, Consensus and Deviation NegativeNegative surprise from 180K expected to 156K, half point negative deviation.
Revisions NegativeLast month's data was downward revised.
Unemployment Rate NegativePrinted 4.4% above expected 4.3% which is disinflationary.
Labor Force Participation Rate NeutralUnchanged at 62.9%.
Average Hourly Earnings NegativeWas expected to post 0.2%, but was down to 0.1%, a 2.5 negative deviation.

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US Jobs report pre-release checklist (6th October 2017)

Previous Non-Farm Payrolls -The US employment report went worse than expected. Jobs' creation was of 156K in July, a little below market's forecasts (-0.49 deviation).
Challenger Job Cuts: -To be released on Thu October 5th at 11.30 GMT. 
Initial Jobless Claims -To be released on Thu October 5th at 12.30 GMT.
Continuing Jobless Claims -To be released on Thu October 5th at 12.30 GMT.
ISM Non-Manufacturing PMI -To be released on Wed October 4th at 14 GMT.
ISM Manufacturing PMI -To be released on Mon October 2nd at 14 GMT.
University of Michigan Consumer Confidence Index - To be released on Fri September 29th at 14 GMT.
Conference Board Consumer Confidence Index -To be released on Tue September 26th at 14 GMT.
ADP Employment Report -To be released on Wed October 4th at 12.30 GMT.

Nonfarm Payrolls United States USD

Last Release

  • 209K Actual
  • 183K Consensus
  • 231K Revised from 222K Previous

Other Events

Aug 4

Average Weekly Hours

  • 34.5 Actual
  • 34.5 Consensus
  • 34.5 Previous
Aug 4

Unemployment Rate

  • 4.3% Actual
  • 4.3% Consensus
  • 4.4% Previous
Aug 4

Average Hourly Earnings (YoY)

  • 2.5% Actual
  • 2.4% Consensus
  • 2.5% Previous
Aug 4

Average Hourly Earnings (MoM)

  • 0.3% Actual
  • 0.3% Consensus
  • 0.2% Previous
Aug 4

Labor Force Participation Rate

  • 62.9% Actual
  • n/a Consensus
  • 62.8% Previous

What we did expect before August Non-Farm Payrolls: It will be different this time

FED

The current USD movement is either a correction or an indication that the poor US currency has finally found a temporal bottom. That will likely be confirmed with the upcoming NFP report, particularly considering last month's reaction to the release and the latest ADP report.

Earlier this month, the big surprise weren't numbers, but the fact that the NFP report was actually able to move the market. As of lately, it had been much about expectations and little about action.

USD/JPY: Strong US wage inflation would add credence to the rally

Strong wage price inflation numbers would not only boost rate hike bets, but also improve the odds of the Fed beginning the balance sheet runoff program in September.

Weak wage growth numbers would remind traders that the three-day rally isn’t backed by the steeper yield curve, thus leading to a fresh sell-off towards key support levels of 108.71-108.13-108.00.

Could US jobs data aid dollar rebound?

It is now all down to Friday’s official nonfarm payrolls report. If this shows further strength in the labour market and another rise in wages then calls for a December rate rise may increase, triggering further dollar buying interest. Conversely, a very weak jobs report may have the opposite effect.

NFP Jobs Created and Potential USD Reaction

· >210,000 Strongly Bullish

· 180,000-210,000 Moderately Bullish

· 150,000-180,000 Moderately Bearish

· <150,000 Strongly Bearish

US Jobs report pre-release checklist (1st September 2017)

Previous Non-Farm Payrolls PositiveThe US employment report went better than expected. Jobs' creation was of 209K in July, a little above market's forecasts (0.5 deviation).
Challenger Job Cuts: NegativeThis report confirm the same hints the ISM is providing with an increase from 28.307K to 33.825K. 
Initial Jobless Claims NegativeFor the third consecutive month the number of people filing for unemployment benefits increases.
Continuing Jobless Claims PositiveThere is a slight a decrease from the previous week's level and in the 4-week moving average.
ISM Non-Manufacturing PMI NegativeISM’s Non-Manufacturing Employment Index registered 53.6 percent, which reflects a decrease of 2.2 percentage points when compared to the June reading of 55.8 percent.
ISM Manufacturing PMI NegativeISM's Employment Index registered 55.2 percent in July, a decrease of 2 percentage points when compared to the June reading of 57.2 percent.
University of Michigan Consumer Confidence Index Positive The preliminar figures show a continuing deterioration of sentiment. The index shows 93.1 vs 95.1 which was the previous release.
Conference Board Consumer Confidence Index PositiveCame out at 122.9 versus the expected 120.9.
ADP Employment Report PositiveThe report indicates a lot of hiring in the private sector, 1.25 deviation between actual and expected, hinting at a positive surprise.

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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, specially 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.

To acomplish 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.

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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.

The department is led by the U.S. Secretary of Labor, Thomas E. Perez, the highest ranking official of the institution. On March 18, 2013, Perez was nominated by President Barack Obama and took office on July 23 2013 when he was confirmed by the Senate.


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.

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 NonFarm Payrolls Forecast?

NonFarm Payrolls Forecast is some sentiment based piece of content that tries to predict what the NFP numbers will be and what impact will it 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.