Nonfarm Payrolls: What to expect from the statistics

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In November and early December, market participants revised their forecasts for interest rates, the fed in particular, from-for fears that the US economy is beginning to reduce growth rates and lost recent momentum.
In this regard, increasing the importance of macroeconomic indicators, among which the most important and most relevant remains Report on the us labor market. Analysts had forecast for today’s release about a week ago, but we remember that markets often correct expectations, given new information. Try to determine what to expect from this indicator at this time.
It seems that traders are now overly focused on any signs of weakness in the U.S. economy. Despite the negative progaz, two new indicator ISM was stronger than expectations, rejecting fears of a hard landing. It is important to note that the employment component of the manufacturing index – rose, and non-productive – on the contrary, decreased. In General, all signals in favour of a strong NFP.
On the other hand, weekly data on claims for unemployment benefits have improved in recent weeks, but the 4-week average rising from multi-year lows, signaling in favor of the weak Payrolls. Confirms these predictions and recently published by ADP, which also missed expectations of $ 195 thousand, showing an increase in employment in the private sector only 179 thousand
In summary, we note that the markets on Monday tuned in to see NFP close to 200 thousand Is weaker than the preceding 250 thousand, but still above trend growth. Even if current projections hold true, we may see the return wave of buying in the stock markets. In that case, if investors will remember about his hopes for the growth rate in 2019, it will greatly help the dollar to strengthen its positions.
Not less important role will be played by the data on wages (Average Earnings). Last month, their annual rate rose to 9-year highs at the level of 3.1%. According to forecasts, it will remain so in November. Surprises to exclude all: the dollar Index lost momentum in the second half of November, as strong data to provide needed support to the greenback, sending it to the storm multi-month highs in pairs with Euro and pound.
Suppose that Nonfarm Payrolls will meet analysts ‘ forecasts will remain in the range of 180-220 thousand Then markets will have to remain in limbo and wait for some other signals: for example, comments of the ECB and the fed, which is scheduled in the next two weeks.
Frankly weak data below 180 thousand jeopardize the annual trend growth of the dollar and will result in a quick capitulation of the market “bulls”. Although this option should not be ruled out, yet now more indications that the national economy of America is gaining good momentum.
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Alexander Kuptsikevich,
Analyst
FxPro