Let’s dig into the non-farm payrolls report and the numbers we have so far.
What’s expected:
- Consensus estimate +60K (range -25K to +125K)
- January -92K
- Private payrolls consensus estimate +70K
- Unemployment rate consensus estimate: 4.4% vs 4.4% prior
- Participation rate prior 62.0%
- Prior underemployment U6 prior 7.9%
- Avg hourly earnings y/y exp +3.7% y/y vs +3.8% prior
- Avg hourly earnings m/m exp +0.3% vs +0.4% prior
- Avg weekly hours exp 34.3 vs 34.3 prior
February jobs so far:
- ADP employment report 62K vs 66K prior
- ISM services employment not yet released
- ISM manufacturing employment 48.7 vs 49.0 prior
- Challenger Job Cuts 60,620 vs 78,327 prior
- Philly employment +0.8 vs -1.3 prior
- Empire employment +5.8 vs +4.0 prior
- Initial jobless claims survey week 205K vs 213K prior
Historically, the headline print is seasonally soft in market with 56% of reports below estimates and 44% beating, excluding 2022/21. On the flipside, 41% of previous unemployment prints have been lower than expected while 33% have been higher, with the remainder matching the consensus.
Non-farm payrolls monthly
In terms of trading, this is a strange one because it’s being released on Good Friday. Stock and bond markets are both closed and — while FX will be open — liquidity will be diminished (see here for what’s open and closed).
The general thinking in markets is that this report doesn’t matter that much because the war is dominating and even another miss wouldn’t be so bad because the past two ADP reports have been solid. I can get behind that line of thinking but only to a certain extent.
Interestingly, non-farm payrolls in 1994 and 1996 were both released on Good Friday and saw huge beats with the market closed and that led to big bond market selloffs the following Monday.
