Will the final NFP reading of 2017 finish with a bang, or a whimper?

Dec 7 • Extras • 35 Views • No Comments

On Friday December 8th at 13:30pm GMT, the BLS department of the U.S. government will publish its latest NFP (non farm payroll) data reading and its last for 2017. Combined with this NFP data another crucial economic calendar metric, the latest unemployment data, will also be delivered, currently at 4.1% the forecast is for the unemployment level to remain unchanged. The forecast for the NFP number, gathered from the various economists polled by Reuters, is for 195k jobs to have been added to the workforce in November. This would represent a considerable fall from the 261k created in October and accounted for in the November release.

At circa 195k the jobs number (if the published figure matches the forecast) would still be above the average for the year, during the first nine months of 2017 the average was circa 176k per month. Once the hurricane season hit the numbers became severely disrupted, therefore the September extremely low reading of -33k and the relatively high reading for October at 261k, could be regarded as outliers. However, analysts and investors may be concerned that if the number comes in at circa 195k for jobs created in November, then little in the way of seasonal jobs have been added to the overall number.

The latest ADP private payroll data change, for jobs created in November, came in right on forecast at 190k when printed on Wednesday, this critical reading is often looked upon as a potential indication of the accuracy for the NFP number, in relation to the forecast.

In terms of impact, both in relation to the value of the dollar and the value of U.S. equities, NFP numbers have failed to move markets significantly over recent years, as the USA economy has steadily moved to record low unemployment numbers during recent months, and the NFP jobs data has appeared to be relatively stable. The shock -33k reading for September published in October, failed to register a significant movement in the U.S. dollar or other securities, as the majority of analysts and investors were aware of the reasons behind the low reading. However, traders would (as always) be advised to monitor this critical high impact economic calendar event closely, as should the number either miss or beat expectations by some distance, then USD could react quickly and significantly versus its major and some of its minor peers.

KEY ECONOMIC PERFORMANCE INDICATORS FOR THE USA ECONOMY.

•    GDP 3.3%
•    Inflation 2%.
•    Unemployment rate 4.1%.
•    Interest rate 1.25%.
•    ADP rate 190k.
•    Labour force participation rate 62.7%.

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