Its that time of month – don’t laugh – but the NFP print has rolled around as the latest witching (end of month, end of quarter) rolls by, this major event sets the course for risk markets until the next month. Why? Its the main figure the Federal Reserve hangs its monetary policy on, good or bad, and the one that traders hang for.
From Calculated Risk comes a summary of the preliminary data from overnight:
• The ADP employment report showed an increase of 200,000 private sector payroll jobs in March. This was close to expectations of 203,000 private sector payroll jobs added. The ADP report hasn’t been very useful in predicting the BLS report for any one month, but in general, this suggests employment growth close to expectations.
• Initial weekly unemployment claims averaged close to 263,000 in March, about the same as in February. For the BLS reference week (includes the 12th of the month), initial claims were at 265,000, up slightly from 262,000 during the reference week in February.
This suggests about the same level of layoffs in March as in February (very few).
• The preliminary March University of Michigan consumer sentiment index decreased to 90.0 from the February reading of 91.7. Sentiment is frequently coincident with changes in the labor market, but there are other factors too – like lower gasoline prices.
The DOL reported initial weekly jobless claims overnight too:
In the week ending March 26, the advance figure for seasonally adjusted initial claims was 276,000, an increase of 11,000 from the previous week’s unrevised level of 265,000. The 4-week moving average was 263,250, an increase of 3,500 from the previous week’s unrevised average of 259,750.
There were no special factors impacting this week’s initial claims. This marks 56 consecutive weeks of initial claims below 300,000, the longest streak since 1973.The previous week was unrevised.
Note: The following graph shows the 4-week moving average of weekly claims since 1971.
The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 263,250. This was above the consensus forecast of 266,000.
This all points to a 200K plus job growth month for March, which gives no impetus for the Fed to hold off on its rate rising agenda. I expect volatility around the USD, which has been falling against the majors this week on a much more dovish lead from Fed Chair Janet Yellen and other members who do not consider rising inflation a “trigger” to normalise rates faster.
