From RanSquawk
March US Non-Farm Payrolls
US Change in Nonfarm Payrolls (Mar) M/M Exp. 190K (Range: low 100K, high 366K) (Feb 236K, Jan 119K)
US Unemployment Rate (Mar) M/M Exp. 7.7% (Range: low 7.6%, high 7.8%) (Feb 7.7%, Jan 7.9%)
Given weaker than expected US jobs data this week, whisper number has been around the 165K mark
- Deutsche Bank 160K
- HSBC 174K
- Goldman Sachs 175K
- Citi 175K
- Barclays Capital 175K
- UBS 190K
- Bank of America 200K
- JP Morgan 210K
Despite the labour market showing strength in recent months, this week's employment data has been weaker than expected in the US with ADP employment change at its lowest level this year at 158K. Other data has also been weaker with the employment sub-index of ISM non-manufacturing coming in lower than the previous month and Thursday's weekly claims data worse than expected. However, it is worth noting that a figure above 220K would bring the six-month average growth in payrolls up to 200K, which is a threshold some FOMC members have described as a significant enough improvement in the labour market to allow the Fed to taper their QE programme. As recently as Wednesday, Fed’s Evans said he wants to see monthly job growth of at least 200,000 for 6 months. On the other hand, analysts at Credit Suisse say two more consecutive months of 225K may prompt the Fed to contemplate tapering off QE purchases. Current estimates range from a low of 100K to a high of 366K, representing a much higher high-end estimate than seen in recent months, however it is worth noting the bulk of estimates are between 175K to 205K, representing a relatively tight range.
Market Reactions
A headline figure in line or higher than the median expectation of 190K would confirm the labour market strength in the US continuing to outperform the Eurozone where unemployment recently hit a record high at 12.0%. However, do note that due to the weaker than expected ADP reading there is a whisper number of 165K and as such, a number in line with the median estimate (190K), or even 10K to 15K below, may well be perceived positively in the initial fast money move and prompt immediate strength in the USD, where recent trends suggest that the greenback is moving in tandem with US economic fundamentals. Also in post release trade keep in mind that a strong number will likely heighten the prospect of the Fed ending QE sooner rather than later and as such any upward momentum in stocks from a forecast beating number may be decidedly short lived. Meanwhile, in terms of precious metals, the latest employment report is unlikely to shake the bearish trend in the yellow metal despite any near term short covering that may be seen following a weak number.