Breaking: US Nonfarm Payrolls increase 303,000 in March vs. 200,000 forecast


Nonfarm Payrolls (NFP) in the US rose by 303,000 in March, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading surpassed the market expectation for an increase of 200,000 by a wide margin. The 275,000 growth recorded in February got revised lower to 200,000.

Other details of the publication showed that the Unemployment Rate edged lower to 3.8% from 3.9%, while the Labor Force Participation Rate improved to 62.7% from 62.5%. Finally, annual wage inflation, as measured by the change in the Average Hourly Earnings, edged lower to 4.1% as forecast.

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"The change in total nonfarm payroll employment for January was revised up by 27,000, from +229,000 to +256,000, and the change for February was revised down by 5,000, from +275,000 to +270,000," the BLS noted in its press release. "With these revisions, employment in January and February combined is 22,000 higher than previously reported."

Market reaction to US Nonfarm Payrolls data

The US Dollar gathered strength against its rivals with the immediate reaction to the US jobs report. At the time of press, the US Dollar Index was up 0.4% on the day at 104.60.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.29% 0.38% 0.50% 0.46% 0.25% 0.50% 0.53%
EUR -0.29%   0.13% 0.21% 0.18% -0.04% 0.21% 0.28%
GBP -0.42% -0.13%   0.08% 0.05% -0.16% 0.08% 0.11%
CAD -0.51% -0.22% -0.12%   -0.04% -0.26% 0.00% 0.13%
AUD 0.04% -0.14% -0.09% 0.02%   -0.26% 0.05% 0.10%
JPY -0.24% 0.06% 0.14% 0.25% 0.22%   0.30% 0.28%
NZD -0.57% -0.20% -0.17% -0.05% -0.09% -0.31%   -0.04%
CHF -0.55% -0.28% -0.16% -0.08% -0.07% -0.32% -0.02%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

 


This section below was published as a preview of the US March Nonfarm Payrolls data at 05:00 GMT.

  • US Nonfarm Payrolls are seen rising by 200K in March after February’s 275K increase.
  • The United States Bureau of Labor Statistics will publish the labor market report at 12:30 GMT.
  • US employment data could impact the Fed rate cut expectations and the US Dollar dynamics.

The United States (US) Bureau of Labor Statistics (BLS) will publish the high-impact Nonfarm Payrolls (NFP) data on Friday at 12:30 GMT. The US labor market data is closely scrutinized by market participants for fresh insights on the Federal Reserve’s (Fed) outlook on the interest rates, which could impact the US Dollar price action in the near term.

What to expect in the next Nonfarm Payrolls report?

The Nonfarm Payrolls report is expected to show that the US economy may have created 200,000 jobs last month, down from a 275,000 increase registered in February. January’s data was significantly revised down to show 229,000 jobs created instead of 353,000 as previously reported.

The Unemployment Rate is likely to hold steady at 3.9% in the same period. Meanwhile, Average Hourly Earnings, an important gauge of wage inflation, is set to rise 4.1% in the year through March, cooling off slightly from February’s 4.3% growth.

The headline NFP figure, along with the previous revisions and wage inflation data, will hold the key to affirm the market expectations of a Fed interest rate cut as early as June. The probability that the Fed will begin lowering rates in June stands at 62%, according to the CME Group’s FedWatch Tool, up from the 58% shown at the start of the week on Monday.

The revival in the dovish Fed expectations could be attributed to the recent commentaries from the Fed policymakers and the weaker-than-expected US ISM Services PMI, as markets paid little heed to strong US JOLTs Job Openings and ADP Employment data.

Amidst the recent Fedspeak, Fed Chairman Jerome Powell on Wednesday reassured markets of the likelihood of interest rate cuts this year. Powell said that "if the economy evolves broadly as we expect," he and his Fed colleagues largely agree that a lower policy interest rate will be appropriate "at some point this year." Meanwhile, Fed Governor Adriana Kugler said early Thursday that she expects the disinflation trend will continue, which will pave the way for the central bank to cut interest rates.

Meanwhile, the US private sector added 184,000 jobs in March, a decent increase from the upwardly revised 155,000 print in February, the ADP reported on Wednesday. The data beat the analysts’ estimates of a 148,000 job gain. US job openings rose by 8,000 to 8.756 million on the last day of February, the Labor Department's Bureau of Labor Statistics said on Tuesday. The market forecast was for an 8.74 million reading.

Previewing the March jobs report, TD Securities (TDS) analysts said: “We look for job growth to have lost further momentum in March following the boomy Jan/Feb gains that came in the 200k-300k range. Household survey noise will keep the UE rate volatile, however, we expect it to stay unchanged at 3.9%.”

“We also look for wage growth to move back to the 0.3% m/m pace —and down 0.2pp to 4.1% y/y— after the ups and downs of the last couple of reports,” the TDS analysts added.

How will US March Nonfarm Payrolls affect EUR/USD?

Increased bets for Fed rate cuts keep the US Dollar undermined against its major counterparts, driving the EUR/USD pair to a weekly high near 1.0875. It remains to be seen if the pair can sustain its upswing in the lead-up to the US NFP showdown.

A strong-than-expected NFP headline figure above the 200,000 expected increase combined with hotter-than-expected wage inflation data could temper June Fed rate cut bets, providing the much-needed lift to the US Dollar while sending EUR/USD back toward 1.0750. Conversely, if the US employment data points to loosening labor market conditions and decelerating trends in pay growth, the Greenback could come under renewed selling pressure amid reinforcement of dovish Fed expectations. In such a case, EUR/USD could advance through the 1.0900 threshold.

Dhwani Mehta, Analyst at FXStreet, offers a brief technical outlook for EUR/USD: 

“The EUR/USD pair has recaptured the critical 50-day Simple Moving Average (SMA) at 1.0830 on a daily closing basis on Wednesday. The 14-day Relative Strength Index (RSI) flirts with the 50 level, suggesting that buyers lean in favor of the pair in the near term”.

“Buyers need to take out the 100-day SMA at 1.0876 to extend the recovery toward the 1.0900 level. The next upside barrier for EUR/USD will be then seen at the March 21 high of 1.0943. Conversely, the initial demand area is seen at the 1.0800 round figure, below which the April 3 low at 1.0764 will be tested. The line in the sand for Euro buyers is envisioned at 1.0725, April lows”, Dhwani adds.

Employment FAQs

Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.

The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.

The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews ​and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Read more.

Next release: Fri May 03, 2024 12:30

Frequency: Monthly

Consensus: -

Previous: 303K

Source: US Bureau of Labor Statistics

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

 

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