The Non-Farm Payrolls report (NFP) is treated as an economic indicator for people employed during the previous month and the number being released will have a direct impact on the markets. In the United States consumer spending accounts for most of the economic activity and the Non-Farm Payrolls report represents 80% of the U.S workforce. Farmers are excluded from the employment figures due to the seasonality in farm jobs.
The U.S. ADP Non-farm Employment Change is a very good predictor of the Non-Farm Payrolls report as the ADP Non-Farm Employment Change measures the monthly change in non-farm, private employment.
The change in private employment underwhelmed market estimates and came in at 107K from the expected forecast number of 140K for the month of June 2019. All eyes will look to the comprehensive Non-Farm Payrolls report (NFP), especially wage growth numbers.
This time around we might expect Analysts to start focussing on other factors in the Jobs market besides the actual NFP number. The Job participation rate which has been very low will come into focus as U.S economic growth shifted lower in the second quarter. The impact of the U.S-China trade truce which seems to be fading as the U.S shifts its focus to the European Union.
The big question is, will a better than expected Jobs number curb the economic slump moving forward coupled with a dovish outlook from the FED? Only time will tell!
Jobs number:
The number of new Non-Farm jobs are expected to increase to 164K from the previous months disappointing 75K Non-Farm jobs.
Hourly earnings:
The Average hourly earnings (M/M) number is expected to increase to 0.3% from the previous months 0.2% - This is a key figure to watch and if this number disappoints, it will signal a weak wage inflation outlook in the US.
U.S. Unemployment Rate:
The U.S Unemployment Rate measures the percentage of the total workforce that is unemployed and actively seeking employment during the previous month. The U.S. Unemployment Rate is expected to remain unchanged at 3.6% unemployed.
Look at the S&P 500 the market has been pushing higher despite global growth concerns. The trade truce between the U.S and China is certainly helping to a certain extent giving some stability to the major markets.
We might expect the price action of the S&P 500 to gradually move higher if we see growth in the jobs market this Friday with the NFP release. Take note that the Average hourly earnings will be watched closely once more as the wage growth rate has been subdued.
The Tech sector has been a clear winner throughout 2019 thus far and that is reflected in the price action of the Nasdaq 100. The index is on track to reach all-time highs ones more as the major FAANG stocks push higher as trade tensions ease.
Take note that the outlook and levels might change as this outlook is released before NFP and before the current days U.S Market open.
There are many ways to trade the Non-Farm Payroll (NFP) report and here are a few strategies traders look at:
Disclaimer:
Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Barry Dumas, Market Analyst at GT247 (Pty) Ltd t/a GT247.com (“GT247.com”) as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. GT247.com does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information which we receive from third party data providers. You must rely solely upon your own judgment in all aspects of your trading decisions and all trades are made at your own risk. GT247.com and any of its employees will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.