Time to crunch some NFP numbers.
One of the additional factors of the poor NFP report was the 35k odd Verizon strikers however, even throwing them back in, it was still a huge miss.
The Verizon 'add-in' is possibly skewing the guesses today which are running around the 180k mark.
If folks are taking the Verizon numbers into account then that would make the average around 145k ex-Verizon and that puts estimates very much to the lower end of the usual 150-250 range that most stay between.
The latest NFP top pickers show how many of them play it safe within that range.
NFP top 5
The top five is as follows;
Ryan Sweet - Moody's
Ted Wieseman - Morgan Stanley
Robert A Dyer - Comerica
Stephen Stanley - Amherst
Jim O'Sullivan - High Frequency Economics
Further confirmation about the Verizon add-in comes from some of the bank previews;
Barclays: For the June US employment report, we expect nonfarm payrolls to rise by 175k, private payrolls to increase by 170k, and government payrolls to rise by 5k. A number in line with our expectation would represent a modest rebound in hiring relative to the May employment report afteradjusting for the effects of the Verizon strike. Telecommunications employment fell 37k in May, about in line with the estimate of the strike-related effects as estimated by the BLS, and we look for this employment to return in June given the conclusion of the strike prior to the survey week. Elsewhere in the report, we expect the unemployment rate to remain unchanged at 4.7%. Finally, we expect average hourly earnings to rise 0.2% m/m (2.7% y/y) and average weekly hours to hold steady at 34.4.
Goldman: We forecast that nonfarm payroll growth rebounded to +210k in June from just +38k in May. In part the pickup reflects the conclusion of a strike at Verizon Communications-this alone accounts for 70k of the month-over-month swing. However, we also see scope for improvement beyond Verizon, as other labor market data have generally looked encouraging. We expect a small increase in the unemployment rate to 4.8% after its three month decline in May. Data from the household survey have been volatile in recent months, but the broad trends-participation stabilizing and job growth remaining strong enough to reduce slack over time-still look intact. We see a low month-over-month gain in average hourly earnings due to calendar quirks, but the year-over-year rate should edge higher.
TD: We expect the sharp downdraft in employment to partially reverse in June, with a forecasted increase of 175k jobs. This print will be supported by the return of 34k Verizon workers who were on strike in May. In addition to the rebound in the telecom sector, a bounce back in the wholesale, manufacturing and construction sectors should also bolster the headline print.The unemployment rate is forecast to increase to 4.8% from the cycle-low of 4.7% on account of an expected rebound in the labor force (following the outsized 820K decline over the prior two months), which should more than offset the gains in household employment. On the wage growth front, average hourly earnings are expected to rise modestly, posting a 0.2% m/m gain, resulting in the pace of wage growth accelerating from 2.5% to 2.7% y/y due in large part to favorable base effects.
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175k is a popular number eh?
After the April numbers I said the poo might hit the fan if May was bad. It probably couldn't have been worse. Another one today will keep the poo flying towards the blades. We've been seeing employment numbers suffer for many months in the smaller regional data points and things like the PMI's. At some point that had to catch up in the main numbers like this. The US jobs market is also just like any other trend, at some point it's going to wobble or change. This is still the longest run of positive NFPs in the history of the report. It won't last forever. Whether this is the time when that happens will be decided in a few hours. Another bad report and the questions about the state of the US economy will jump in volume. A decent beat and many will start thinking the last two were just blips but I doubt it will change sentiment about rate hikes and the economy too much.
I see a few trades today. One is playing the 100 level in USDJPY. It's a big level and well within range (at the moment) to see the data have an impact. How it reacts after the data will be very important. If the level goes on a bad number but quickly regains it, that's a potentially strong bullish signal that the level can be leaned against for longs. Conversely, it's going to take a bit more than NFPs returning to normality to change expectations for the Fed so any jump may also be a decent fading opportunity.
GBPUSD is going another pair that could be good for trading NFP. As we know sellers are fully in control and ready to spank any rallies. A bad NFP won't change those thoughts so once again, hitting a decent rally might be the way to go. I'm less inclined to try and catch that falling knife if the number is good as that might just be more fodder for the sellers to push the price lower and keep it there.
As always, it should be fun, games & fireworks, one way or another, and that's the beauty of this data point. It has been, is and always will be, the biggest of the lot.
Roll on 12.30 GMT and don't forget to make your guesses here.
