Big Market Movers: What To Expect From The Non-Farm Payroll Report

The Non-Farm Payroll report will become more and more important in defining the U.S. economic recovery. Any policy to revive an economy focusses on employment and signs have been pointing to increasing labour market participation. However, there is some way to go to reach optimal employment. A consensus range from 978,000- 990,000 new jobs are estimated to have been filled in April.

PMI reports for both Manufacturing and Non-Manufacturing sectors typically indicate how the economy is performing, specifically, the manufacturing sector tends to rank towards the top of the highest paying job sectors in the U.S. Any rise in employment in this sector will, therefore, point to optimism from some the country’s major companies. The pace of job creation in both the Services and Manufacturing sector have pointed to improving employment conditions. Last month, the rate of new hires fell off the surging pace of March, yet remained healthy.

ADP payrolls indicate the rate of job creation in the private sector, a smaller subsection of the U.S. labour market, has been robust. A total of 742,000 new jobs were added to the U.S private sector in April, representing the strongest reading since September 2020, further indicating an accelerating growth trend. The rise was off the pace forecasted, yet the trend is positive.

Another factor in labour market participation is the number of workers who are claiming jobless allowance. The number of new applications dropped below 500,000 in the week ending 1st March, highlighting a return to pre-pandemic levels. The four-week average of continuing claims dropped marginally to 3.68 million, representing the lowest number of filings since March 2020.

What can be said with regards to the outcome for the Non-Farm Payroll? Job creation is likely to show a positive trend of growth, as reflected in a series of employment statistics stated above. However, the final figure may be slightly below the top range of forecasts and the number of new workers joining the labour force in April may shoot below the 978,000-990,000 consensus forecast.

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