- NFP leading indicators table is quite mixed, although red lights look stronger than green ones.
- Another disappointing ADP report hints modest US job creation for the second consecutive month.
- Corporate layoffs are down and job openings are rising, which could be good news for future reports.
After a dismal May report which helped the Fed subsequently hint an upcoming July interest rate cut, the US jobs report for June seems a bit less decisive. Looking at the NFP Leading Indicators table, it's not like things are looking much better this time, but markets might already have priced in the US Dollar the Fed dovish re-thinking.
US jobs report pre-release checklist – Jul 5th, 2019
The first glance at the table seems quite balanced, with four negative inputs, three neutral and three positive signals, but things get more negative looking at the details. It's not only that we are coming from one of the worse NFP figures from the last decade, but also three of the most meaningful leading indicators have provided pretty strong negative surprises. Starting with the ADP Employment private report, considered by our Non-Farm Payrolls guide as "the harbinger of the NFP, because of the existent correlation between the two", which only printed 102k new jobs added. This is an improvement from the terrible figure from May (revised to 41k), but still marks the second-worst figure in the last eight years.
The Employment Index of the ISM Non-Manufacturing PMI survey also showed a clear disappointment, falling from 58.1% in May down to 55.0% in June. It is the sixth time in the last nine months in which the labor market component of this important survey prints a drop, indicating a mid-term bearish trend. Our NFP crash course mentions that "you should consider the employment component of Non-Manufacturing more important than the Manufacturing, simply because services sectors amount to 70% of US employees". The third negative component came last week, with the Consumer Confidence Index released by the Conference Board falling by 13 points, back to levels not seen since January during the US government shutdown.
It's not like all signs in the US employment sector point to another terrible jobs report, though. The ISM Manufacturing PMI shows a pretty resilient behavior, as its Employment Index surged from 53.7% to 54.5%, the second month in a row with a positive outcome.
The number of corporate layoffs printed by the Challenger Job Cuts report has fallen down and the US companies also announced a diminishing amount of lay-offs for the third quarter and that should help keep the US labor market with the foot on the pedal. The JOLTS Job Openings number is at multi-year highs which also shows there could be more gains of jobs coming up.
With pretty neutral signs from the weekly Jobless Claims figures (retracing a bit being quite stable around multi-year positive levels) and the University of Michigan Consumer Confidence survey (also retracing in the last month but still following an upwards long-term trend), there is something in the menu for either bulls and bears.
That said, we are siding more in the bearish side for this upcoming NFP report, anticipating a rather disappointing performance in the US jobs creation, although probably not as bad as the one printed last month.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD: Next stop emerges at 0.6580
The downward bias around AUD/USD remained unabated for yet another day, motivating spot to flirt with the area of four-week lows well south of the key 0.6700 region.
EUR/USD looks cautious near 1.0900 ahead of key data
The humble advance in EUR/USD was enough to partially leave behind two consecutive sessions of marked losses, although a convincing surpass of the 1.0900 barrier was still elusive.
Gold extends slide below $2,400
Gold stays under persistent bearish pressure after breaking below the key $2,400 level and trades at its lowest level in over a week below $2,390. In the absence of fundamental drivers, technical developments seem to be causing XAU/USD to stretch lower.
Breaking: SEC gives final approval for Ethereum ETFs to begin trading tomorrow
The Securities and Exchange Commission approved the S-1 registration statements of spot Ethereum ETF issuers on Monday, according to the latest filings on its website. Following the approval, issuers have started making moves as the products are set to begin trading on exchanges tomorrow.
What now for the Democrats?
Like many, I applaud Biden’s decision. I would have preferred that he’d made it sooner, but there’s still plenty of time for the Democrats to run a successful campaign. In fact, I wish something on the order of a two-month campaign – as opposed to a two-year campaign – were the norm and not the exception.