The market, as we all know, is fraught with uncertainty. Consequently, next month’s non-farm payroll (NFP) reading for November is already poised to attract a great deal of focus, especially since October’s report was largely overshadowed by the government shutdown. Looking into the future Analysts and investors are looking ahead with expectation. They’re looking ahead to November’s NFP data release, which will occur just days after the Federal Reserve’s next meeting.
Federal Reserve Chair Jerome Powell is navigating one of the trickiest economic paths in recent memory. He’s trying to steer the largest floating hunk of monetary aircraft carrier imaginable. Many key economic indicators are currently frozen, dubious or meaningless. This unprecedented situation has resulted in download your employer infiltration of past and future employment data.
Today’s September NFP report shouldn’t be so late! Today, it’s turned into a musty, dusty old reference for a market hungry for new ways of thinking. September was an unusually high data point. Despite its loss of relevancy over time, it is still unfortunate that it is the only guidepost available to market participants. Today’s non-farm payroll report comes out at 8:30 am eastern and the options markets are currently pricing in a 2% move based on the report. Such is the level of anxiety and anticipation about the new data.
Let’s hope a more robust print from September offers some comfort. It’s the bulk of largely old news that paints a stark picture that doesn’t catch up with the big wave of recent layoffs as reported last month in October. The disconnect between September’s figures and the current state of employment raises concerns among analysts regarding the Federal Reserve’s hawkish stance amid a potential economic slowdown. A weak September reading could amplify fears that Powell has maintained an aggressive policy approach without a clear understanding of the emerging economic landscape.
Historically, the August employment data has been proven to underreport first estimates before subsequent revisions bring them more in line with the true state of affairs. In recent years, this revision has averaged between 40,000 and 60,000 jobs added. Market watchers tend to read the August figures with a cautious eye. They hope for an upward re-benchmarking, but understand that it may not fully capture the added complexity of the months ahead.
The current prediction for September’s NFP is 51,000 jobs. Those projections go all over the map, from predicting a loss of 20,000 jobs to an increase of 105,000 jobs. This enormous gap reflects some real ambiguity and fear about what this long-awaited report will show. If September’s NFP print comes in above 80k jobs, that would probably strengthen the bullish case for the U.S. dollar in the currency markets. A weak number could stoke fears on macroeconomic desks even further, resulting in increased volatility.
The markets are looking forward to next month’s NFP release. Investors are dealing with a double whammy of lagging data and as economic indicators appear to be shifting underneath our feet. A likely promising September job report is a world away from the wave of increasing layoffs. This makes for a really confusing picture as far as what financial market and policy-making actors should be doing.