January Non Farm Payrolls – What to Expect?

Posted by James Hughes -
image


It’s another week that has yet again been dominated by the coronavirus. Wednesday’s rumours of a breakthrough in treatment led to a surge. Stock markets and the US dollar were the first ones to feel it. Market predictions for this month’s numbers are for an increase of a 160K new jobs. January Non Farm Payrolls would be an increase from last month’s 147K. However, that doesn’t mean we won’t get a high degree of volatility if we see a miss in market expectations.

Mixed expectations

Market predictions for this month’s numbers are for an increase of a 160K new jobs. This would be an increase from last month’s 147K. However, it would show continued growth and could cement the fact that the labour market remains in remarkable shape. However, as ever it will be the average hourly earnings that will be the most important economic reading.

Improvements in the January Non Farm Payrolls print should not surprise as the January ISM manufacturing survey. The survey’s improvement reflected ebbing trade tensions due to the US-China phase one agreement. This has already indicated a rise in factory employment this week.

A stronger wage growth, however, is always good news. Policymakers are eagerly waiting for inflation to heat up towards the Fed’s 2.0% target. Expectations are that wages will increase monthly to the 3% after dipping below last month.

The central bank’s favourite inflation index was persistently on the downside last year. It fell from 2.0% to 1.5% y/y before inching up to 1.6% in December. For the full year of 2019, real consumer spending was also softer, printing an increase of 4.0%. This was the smallest in three years after rising by 5.8% in 2018. Recall that the Fed described the pace of expanding in household spending as “moderate” in the latest monetary statement, revised from “strong” previously. Therefore markets could turn sensitive on measures that have an impact on consumption.

After a surge in stock markets this week it seems like it would take a monumental move in the payroll data to derail the upside we have seen to now. With that mind, the jobs report could garner colossal volatility.

Funding Methods

Risk Warning
Please note that forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors. Trading in financial instruments may result in losses as well as profits and your losses can be greater than your initial invested capital. Before undertaking any such transactions, you should ensure that you fully understand the risks involved and seek independent advice if necessary. Please read and ensure you fully understand our Risk Disclosure.

Legal Information
SM-INVEST is a trading name of Scope Markets Ltd. Financial Services are provided by Scope Markets Limited, registration number 145,138 (registered address: 5 Cork street, Belize City, Belize).Scope Markets Ltd is regulated by the International Financial Services Commission of Belize (IFSC) the license numbers IFSC/60/373/TS/20 and IFSC/60/373/BCA/20.

Jurisdictions and restrictions
Scope Markets does not offer its services to the residents of certain jurisdictions such as Afghanistan, Cote d'Ivoire, Cuba, Iran, Libya, Myanmar, North Korea, Sudan, Puerto Rico, USA, Syria, and Ecuador. Please check Restricted Countries.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

©2019 SM-INVEST trading as Scope Markets Ltd. All rights reserved.