U.S. NFP Report Trading Guide

Nonfarm Payrolls measures the change in the number of people employed during the prior month, excluding workers in the farming industry. Given that full employment is one of the Federal Reserves mandates, it is very closely watched.

A reading that is stronger than forecast is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD.

Last NFP Data Summary?

  • U.S. added 528K jobs in July vs. 250K estimate
  • Unemployment rate improved from 3.6% to 3.5%
  • Average hourly earnings ticked higher from 0.4% to 0.5%
  • June NFP reading upgraded from 372K to 398K

The economy added 528K jobs in July, which is higher than the estimated 250K increase and also higher than the previous month’s figure.

Jobless rate down from 3.6% to 3.5% instead of holding steady as many expected. The labor force participation rate held steady at 62.1% during the month.

Wage growth was also observed, as the average hourly earnings figure accelerated to a 0.5% gain instead of slowing to 0.3%.

What’s expected this time?

  • August hiring to come in at 295K
  • Jobless rate to hold steady at 3.5%
  • Average hourly earnings to tick down to 0.4%

Number crunchers continue to predict a slowdown in U.S. hiring, with the August report expected to show a 295K increase in employment.

This might keep the jobless rate steady at 3.5% for the month, unless there are any major changes in labor force participation.

Wage growth might also slow down to just a 0.4% uptick, keeping inflation fears in check

Leading indicators are giving mixed signals so far. The ADP non-farm employment change figure came up short at 132K versus the 300K consensus for August while the JOLTS job openings report showed more positions available in the previous month.

Weaker than expected results could dampen hopes of another 0.75% interest rate hike from the Fed, especially since the latest round of inflation figures reflected easing price pressures.

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