Breaking: US Nonfarm Payrolls rise by 114,000 in July vs. 175,000 forecast
|Nonfarm Payrolls (NFP) in the US rose by 114,000 in July, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading followed the 179,000 increase (revised from 206,000) recorded in June and fell short of the market expectation of 175,000.
Follow our live coverage of the US Nonfarm Payrolls data and the market reaction.
Other details of the report showed that the Unemployment Rate climbed to 4.3% from 4.1% in June, while the Labor Force Participation Rate ticked up to 62.7% from 62.6%. Finally, annual wage inflation, as measured by the change in the Average Hourly Earnings, declined to 3.6% from 3.8% in the same period.
"The change in total Nonfarm Payroll employment for May was revised down by 2,000, from +218,000 to +216,000, and the change for June was revised down by 27,000, from +206,000 to +179,000," the BLS noted in its press release. "With these revisions, employment in May and June combined is 29,000 lower than previously reported."
Market reaction to US Nonfarm Payrolls data
The US Dollar (USD) came under heavy selling pressure with the immediate reaction to the disappointing July jobs report. At the time of press, the USD Index was down 0.65% on the day below 103.70.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.61% | -0.18% | -1.25% | 0.01% | -0.13% | -0.13% | -0.88% | |
| EUR | 0.61% | 0.43% | -0.64% | 0.61% | 0.48% | 0.46% | -0.27% | |
| GBP | 0.18% | -0.43% | -1.09% | 0.19% | 0.03% | 0.04% | -0.69% | |
| JPY | 1.25% | 0.64% | 1.09% | 1.30% | 1.13% | 1.12% | 0.39% | |
| CAD | -0.01% | -0.61% | -0.19% | -1.30% | -0.14% | -0.13% | -0.87% | |
| AUD | 0.13% | -0.48% | -0.03% | -1.13% | 0.14% | 0.00% | -0.74% | |
| NZD | 0.13% | -0.46% | -0.04% | -1.12% | 0.13% | -0.01% | -0.71% | |
| CHF | 0.88% | 0.27% | 0.69% | -0.39% | 0.87% | 0.74% | 0.71% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the US Nonfarm Payrolls data at 05:00 GMT.
- US Nonfarm Payrolls are seen rising by 175K in July after June’s 206K increase.
- The Bureau of Labor Statistics will publish the high-impact United States jobs report on Friday at 12:30 GMT.
- The employment data could exacerbate the US Dollar’s pain after the Fed’s dovish hold on Wednesday.
Attention now turns to the high-impact Nonfarm Payrolls (NFP) data for July, slated for release on Friday at 12:30 GMT, as markets continue to assess this week’s US Federal Reserve (Fed) policy decision.
The US labor market data will be released by the Bureau of Labor Statistics (BLS), which could hint at another interest-rate cut by the Fed before the year’s end, as a September lift-off is a done deal. The US Dollar (USD) is poised for heightened volatility on the data release.
What to expect in the next Nonfarm Payrolls report?
The Nonfarm Payrolls report is expected to show that the US economy added 175,000 jobs in July, following a better-than-expected gain of 206,000 in June.
The Unemployment Rate is likely to stay unchanged at 4.1% in the same period. Meanwhile, a closely-watched measure of wage inflation, Average Hourly Earnings, is seen rising by 3.7% in the year through July after reporting a 3.9% increase in June.
The US labor market report is more significant this time around, especially after the Fed tweaked its July policy statement to mention that it is "attentive to the risks to both sides of its dual mandate", rather than previously only noting its attention to inflation risks.
On Wednesday, the Fed kept the fed funds rate at 5.25% to 5.5%, acknowledging “some further progress” toward its 2% inflation goal.
During the press conference, Fed’s Chair Jerome Powell said that “the broad sense of the committee is that the economy is moving closer to the point at which it would be appropriate to reduce our policy rate,” cementing an interest rate cut in September.
On the employment front, Powell said indicators show the job market has gradually normalized from “overheated” conditions. Although he tried to be rather cautious with his message, his take on inflation and employment only made markets believe that another rate cut could be on the table this year beyond September.
Meanwhile, the US private sector saw an employment gain of 122,000 in July after advancing by an upwardly revised 155,000 in June, the ADP National Employment Report showed on Wednesday. The data missed the market expectations of 150,000 in the reported period. Additionally, the BLS reported in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday that the number of job openings on the last business day of June stood at 8.184 million, against the 8.03 million expected.
Previewing the July employment situation report, TD Securities analysts said: “We look for July payrolls to move largely sideways vs June, printing 200k at the start of Q3. High-frequency data suggest employment growth has continued to hold up. Separately, the UE rate likely stayed unchanged at 4.1%, but the risk is that it drops back to 4.0% after its recent gains.”
“We also look for wage growth to cool by a tenth to 0.2% m/m, and down to 3.6% YoY,” the analysts added.
How will US July Nonfarm Payrolls affect EUR/USD?
The Fed’s dovish outlook fuelled a US Dollar (USD) correction across the board while the benchmark 10-year US Treasury bond yields attacked the key 4.0% level, lifting the EUR/USD pair back on the 1.0800 threshold. Will the pair sustain the rebound on the key US NFP release?
An upside surprise in the NFP headline figure and wage inflation data would pour cold water on additional rate cut prospects this year, allowing the US Dollar to come for air. This, in turn, could reinforce fresh EUR/USD selling back toward 1.0700. However, if the US employment data affirms loosening labor market conditions and the disinflationary trend in wage inflation, the Greenback could accelerate its corrective downside on renewed dovish Fed bets. In such a case, EUR/USD could extend the recovery toward the 1.0900 level.
Dhwani Mehta, Analyst at FXStreet, offers a brief technical outlook for EUR/USD:
“The EUR/USD pair faced stiff resistance at the 21-day Simple Moving Average (SMA), aligned at 1.0856 and returned to negative territory. The 14-day Relative Strength Index (RSI) turned south below the 50 level, currently near 42, suggesting that sellers could retain control in the near term.”
“A strong foothold below the July low of 1.0713 is critical to unleashing further downside toward the 1.0650 psychological barrier. On the flip side, buyers need to find acceptance above the 21-day SMA at 1.0856 for an extended recovery toward the 1.0900 round figure. Further up, the July high of 1.0948 could be challenged,” Dhwani adds.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
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