NFP preview in the Employment Week

NFP preview in the Employment Week
Analysis
Ahura Chalki
Author:
Ahura Chalki
Published on: 05.08.2021 16:46 (UTC)
Post reading time: 2.51 min
80

ADP missed, Jobless Claims fall, Job Cuts in record low!


This week is the "Employment Week" in the United States. Yesterday, we had ADP numbers surprised us, and today Jobless Claims,...

In terms of ADP, the market expected the number of employees to increase by 695,000, which could be slightly higher than the previous increase of 692,000 but lower than the peak seen in May by 978,000. However, the market was surprised by missing the estimates, falling twice as expected to just 330K jobs. 


Today also had the number of Initial Jobless Claims for unemployment benefits for the week ending July 31. Compared to pre-pandemic levels, this figure still exceeds approximately 200,000 people, with 385K claim unemployment benefits. Despite the decline in the number of corporate layoffs, the current decline in jobless claims seems to have been delayed, and the risk of growth may resume. 

However, the US Department of Labor's surprise was the continuing Jobless Claims which fall to 2.93M from 3.296M. The published number is 14K less than a week ago, but 1K more than 384K estimates. Considering this week's decrease, the 4-week average also decreases 25K to 394K. 


Before tomorrow's None-Farm Payroll number, we had the Challenger July Job Report as well. According to the latest reports that companies have difficulty finding an employee, US employers, according to a report released Thursday by "Global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc," announced 18,942 job cuts in July, down 93% from the 262,649 cuts announced in the same month last year, the lowest level since in June 2000, when 17,241 job cuts were announced. Comparing to the previous month, it is 7.5% lower than the June number of 20,476 cuts.

This indicator has been highly valued by the current Treasury Secretary Yellen in the past, so it is also regarded as having a fundamental impact on the overall job market. 




And finally, on Friday, the market remained optimistic about the July None-Farm Payroll number. The data is expected to record an increase of 870,000, which is higher than the previous value of 850K, and the peak seen in March this year is an increase of 916,000. 


The market also expects unemployment to decline 5.7% from 5.9% in June. In any case, judging from past historical data, the unemployment rate in the United States is still relatively high. Before the pandemic broke out, the unemployment rate in the United States was basically below 5% in the past few years. On the other hand, the U6 unemployment rate fell steadily to 9.8%, a decline of 13.0% from its peak in April last year. However, consistent with the unemployment rate, the data is still slightly higher than the pre-pandemic level. 


These data will determine the employment growth situation in the United States and further affect the FOMC monetary policy. Fed officials have different outlooks on the labor market and economy, so do on monetary policies. We have to wait for tomorrow's Labor market data and see what we have to expect from the next FOMC monetary policy meeting in September. 


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