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1 Aug 2014
The day ahead; Nonfarm Payrolls - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank give us an insight to the key events ahead.
Key Quotes:
“US payrolls. If we are still talking about uncertainty than this is the big one. After all, we are talking about a focus on MoM changes in a US labour force of 155.7 million people. That is obviously not counted in full, rather an estimate is made from just a small sample of the total; and the recent 3-month average increase from that sample survey has been 267K, which is just 0.17% of the total labour force; so what for markets would be a “shocking” up/downside surprise of say 50K is actually just 0.03% of the total US labour force – that would be seen as a rounding error in most places, especially given it is based on a sample rather than the whole entity! Regardless, consensus this month is 230K, with a range from 160K to 310K. The official unemployment rate is expected at 6.1% but recall that the unofficial (but increasingly Fed-favoured?) underemployment rate was at 12.1% last month”.
“We also get average earnings, seen up 2.2% YoY – headline CPI is around 2.0%, so that is real pay-rise of 0.2% YoY at best (and that is the mean average, not the median): in short, let’s not think that the US Employment Cost Index is accurate in pointing to a sudden surge in wages – after all the ‘economic dice seem loaded’. And don’t forget the ISM manufacturing: will it follow Chicago?”
“Where equities, rates, and FX crosses all stand at the end of the day will obviously be based on those few key data points. Yet more uncertainty – but at least we might break out of the volatility-free slumber that the financial markets have been in for most of this year”.
Key Quotes:
“US payrolls. If we are still talking about uncertainty than this is the big one. After all, we are talking about a focus on MoM changes in a US labour force of 155.7 million people. That is obviously not counted in full, rather an estimate is made from just a small sample of the total; and the recent 3-month average increase from that sample survey has been 267K, which is just 0.17% of the total labour force; so what for markets would be a “shocking” up/downside surprise of say 50K is actually just 0.03% of the total US labour force – that would be seen as a rounding error in most places, especially given it is based on a sample rather than the whole entity! Regardless, consensus this month is 230K, with a range from 160K to 310K. The official unemployment rate is expected at 6.1% but recall that the unofficial (but increasingly Fed-favoured?) underemployment rate was at 12.1% last month”.
“We also get average earnings, seen up 2.2% YoY – headline CPI is around 2.0%, so that is real pay-rise of 0.2% YoY at best (and that is the mean average, not the median): in short, let’s not think that the US Employment Cost Index is accurate in pointing to a sudden surge in wages – after all the ‘economic dice seem loaded’. And don’t forget the ISM manufacturing: will it follow Chicago?”
“Where equities, rates, and FX crosses all stand at the end of the day will obviously be based on those few key data points. Yet more uncertainty – but at least we might break out of the volatility-free slumber that the financial markets have been in for most of this year”.