The non-farm payroll report or NFP report will be released in less than 48hours and many market participants look forward to this report in order to guide them through the rest of the trading month. January’s report disappointed the markets severely while February’s report offer a slight upside surprise. This combination makes Friday’s NFP report that much more important in order to get a better understanding of how the US labor market fared.
It will not be until the NFP report released during the first Friday of June until we will have a clear picture of the actual strength or weakness of the first-quarter as with each NFP report comes revisions for the prior two months which means that the NFP report for May will carry revisions for March and April. One thing traders need to keep in mind is that the NFP report is a backwards looking economic indicator and does not suggest future strength.
Every Wednesday before the NFP report traders get a snapshot of private sector hiring reported by ADP. On average the ADP report misses the actual NFP report by 37,000 jobs. Today’s ADP report showed 191,000 new jobs were created in the private sector while the previous report was revised upward to show a gain of 178,000. The upward revision could translate into an upward revision of February’s NFP report which needs to be accounted for when taking a look at the March NFP.
Economists expect Friday’s NFP report to show a gain of 200,000 new jobs and with the overall improvement in initial jobless claims the market number is actually above that figure. Given the average miss of the ADP report by 37,000 this would give us a range for Friday’s report between 154,000 and 237,000.
The overall positive mood about Friday’s NFP report has allowed the US Dollar to stabilize and mount minor rallies against the New Zealand Dollar as well as Australian Dollar while it stabilized its sell-off against the Canadian Dollar. Trading in the US Dollar is likely to increase tomorrow after the release of initial jobless claims which do not account for Friday’s NFP report.