September 2008 U.S. Non-Farm Employment Change
October 2nd, 2008 Posted in Indicator ReportsWhat is the “Non-Farm Employment Change?”
The U.S. Non-Farm Employment Change, also known as “Non-Farm Payrolls” (NFP) and the “Employment Report,” is a monthly economic indicator used to measure the change in the number of employed people, excluding the farming industry.
Each month the Current Employment Statistics Program surveys about 150,000 businesses, representing approximately 390,000 worksites, in order to provide detailed industry data on employment, work-hours, and earnings of workers on non-farm payrolls for all 50 U.S. states. The survey is then published on the first Friday of each month.
The NFP is an important leading indicator that also affects consumer spending, which accounts for a majority of overall economic activity. Traders value the indicator with the highest importance as its early monthly release can set the tone for the rest of the month’s market movement. Investors should also note Wednesday’s 12:15 (GMT) release of Automatic Data Processing Inc.’s (ADP’s) estimate of Non-Farm Employment Change. In the past, ADP has provided an accurate assessment of what was to come from the actual NFP release two days later. With the volatility of world economies in recent months, however, ADP has not been able to correctly estimate the Non-Farm Payroll outcome, only strengthening the real power behind Friday’s news release.
If the Survey Comes Inline With Market Forecasts
Expectations for this month reveal that the Non-Farm Employment Change figures are forecasted to drop to -90K from last month’s -84K. Such a result, should it take place, will be the lowest drop in employment numbers that the U.S. economy has experienced since April of this year. The recent economic struggle, which is being fought vehemently by the U.S. government, has created doubt in the market for the USD, which is driving its value lower. Considering that this survey has delivered negative figures for several consecutive months now, another sharp drop could signal a continuation to the USD’s bearishness. This would mean the USD could be facing a very unfortunate weekend, causing the EUR/USD pair to rise back toward 1.4500 levels again.
If the Survey Will Surprise With Bullishness
If the actual figure is higher than forecasted, traders are likely to see a reversal to the recent down trends. Currently, investors are setting their positions on the USD based on the assumption that by the end of the week, the USD should face a continuation of its bearish movement. However, in case the survey delivers better figures than expected, such as a figure of -70K instead of the forecasted -90K, investors might be compelled to reevaluate their strategies and go long on the USD. In this turn of events, the USD may receive an extra boost that will halt its recent bearish movement, and the EUR/USD could drop toward levels of 1.3700.