NFP report preview

Today July NFP report is to be published at 12:30 GMT from the 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 222,000. July ADP employment number was not that encouraging at 178,000 after June’s encouraging 191,000.

• Today payrolls are expected at 180,000.

• The second most vital component is wage growth which as of now is showing healthy growth of 2.5 percent. Today expected at 2.4 percent y/y.

• The labor force participation rate is showing no signs of rebound. It was at 62.8%, in the last report.

• The unemployment rate is expected to improve by 0.1 percent to 4.3 percent.

• The underemployment rate is expected to improve further from current 8.6 percent.

• Average weekly hours were previous 34.5; No major change is expected.

Impact –

• The immediate impact is usually very volatile and today could be more as the market is already agitated by weak economic dockets coming out of the United States.

• A strong report especially the headline number (above 235,000) and wage growth could lead to a recovery in the dollar which has declined for 5 consecutive months.

• Dollar selloffs would accelerate on a materially weak report of headline below 150,000. The dollar index is currently trading at 92.67, down 0.03 percent so far today.