Non-Farm Payroll Announcement Preview

It is the beginning of a new month and it only means one thing – the Bureau of Labor Statistics will release the data for monthly change in employment excluding farming sector in the United States. Last month, we saw Non-farm payrolls increase by 148,000 in the US, below the market expectations of 190,000. Solid increases were reported in construction, health care and manufacturing whilst retail trade continued to cut jobs.
Why is the announcement important?
Non-farm payroll is one of the most closely watched indicators and is considered the most wide-ranging measure of job creation in United States. This makes the non-farm payroll highly significant given the importance of labor to the US economy. An increase in the non-farm payrolls would suggest rising employment and potential inflation pressure which would mean a potential rate increase by the Federal Reserve. A decline would suggest a slowing economy which could mean a hike in interest rates is less likely in the short term. The measure accounts for around 80% of the workers who contribute to the Gross Domestic Product.

Expectations
According to the estimates from leading financial firms, the forecast for the upcoming non-farms payroll announcement is around 178,000. It is important to keep an eye on the announcement as a higher than expected figure will mostly be seen as positive for the US Dollar, whereas a lower than expected reading is seen as negative.
Leading financial firm forecasts

Source: Bloomberg
Non-farm payroll calendar for 2018