2016.05.0607:19:00UTC+00April Non-Farm Payroll Preview

Today NFP report is to be published at 12:30 GMT from US.

What is NFP report?

• NFP or non-farm payroll report is the monthly statistics on labor condition in the US released by US department of labor statistics. The report comprises goods, construction and manufacturing sector companies.
• This report influences the financial markets deeply across asset class.

Key highlights –

• Headline number for total hires last month was 215,000. April ADP employment number was much worse than expected at 156,000, Worst since September,2014.

• Change in private payroll has been 195,000 last month. Today expected 190,000.

• Total payrolls are expected at 200,000.

• Most vital component is wage growth, which only recently have started showing some strength. Today it is expected to rise by 0.3% on monthly basis and 2.4% annually.

• Labor force participation rate has weakened over the past year however unexpectedly rose recently, expected to remain flat today at 63%.

• Unemployment rate is expected to drop to 4.9%.

• Underemployment rate is expected to fall further from current 9.8%

Impact –

• Volatility is sure to be on the card, post release.
   
• Any number above 250,000 would be considered as very good and Dollar will start gaining its lost grounds.

• While number below 160,000 might dent dollar’s strength severely.

Better than expected wage growth would be key for Dollar’s strength. Any wage growth above 2.5% will bring the focus on faster rate hikes. Better payroll can also boost sentiment for equities.

Morgan Stanley however has forecasted weakness in Dollar today and expects Euro to reach 1.16, while yen to drop to 103 in second quarter. Morgan Stanley feels, both European Central bank and Bank of Japan are running out of policies to fight deflation and higher exchange rates.