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US NFP Preview: Could Show Volatile Action This Week

May 04, 2021 – Nonfarm Payrolls report promises volatile action this week coming Friday with reports about thousands of jobs created in the US.

SpaceX staff working

The April change in nonfarm payrolls is expected to show another robust round of hiring, the consensus estimate is for 950,000 jobs created, with some analysts eyeing a gain of 1.5 million jobs.

The most market-sensitive high-frequency data point, US April employment, is released at the end of the week. Another monster job report is expected after a 916k increase in nonfarm payrolls in March. The early respondents to the Bloomberg survey have a median guesstimate of nearly 980k jobs, though there are already some projections of a million or more. Private sector employment is anticipated to be around 15% higher than March’s increase of 780k.

The focus will undoubtedly be on economic figures, especially on Friday with April’s Nonfarm Payrolls publication. A full buildup awaits traders during the week. The first hint comes from the ISM Manufacturing Purchasers’ Managers’ Index, which will likely hold up at high ground around March’s 64.9 level. The employment component is critical for the NFP.

ADP National Employment Report

ADP’s labor market figures are forecast to show a faster creation of private-sector jobs and cause jitters in markets. However, it is essential to note that America’s largest payroll company’s figures have not been well-correlated with official statistics. Wednesday’s second release is of higher importance.

The ISM Services PMI is the last and perhaps most important signal as most Americans work there. The calendar is pointing to further gains beyond March’s 63.7 – an all-time high. The employment component is central, and so is the Prices Paid one, amid concerns of rising inflation.

Thursday’s weekly jobless claims for the week ending April 30 are out of the NFP’s scope but could affect traders’ mindset as tension mounts toward Friday.

Finally, April’s job figures are here. At the same time, the calendar is pointing to an increase of 925,000 – a superb gain in pre-pandemic standards – some project an even faster increase in hiring. Anecdotal evidence from the spring month is pointing to accelerated job growth.

DOLLAR

For the dollar, the reaction is straightforward – over a million new positions should keep the greenback bid, especially if accompaniedit by an increase in the participation rate, an indicator of confidence. Any sub-million gain could be considered a disappointment.


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