Upside, Balanced or Divergent risk for NFP?


By: Andria Pichidi

The 4k initial claims rise to 219k in the final week of September extended gains of 5k to 215k (was 213k), and 4k in the BLS survey week to 210k from just 206k at the start of the month. This is a third consecutive weekly gain. The last two gains likely received a boost from the September 16 start of the UAW-GM strike. Strikers don’t qualify for benefits, but suppliers to GM do.

The claims path remains tight, beyond the strike distortion of the last two weeks. Claims have averaged 213k in September, versus prior averages of 216k in August and a 212k cycle-low in July that was previously seen in September of 2018.

On the flipside, yesterday, September’s ADP number rose only slightly up to 135K, undershooting the 140k private BLS payroll estimate with a 155k total BLS payroll increase. The September ADP gain lies below the 173k year-to-date average for ADP as well as the 145k year-to-date average for private payrolls.

Taking into consideration the claims today, the ADP, and consumer and producer sentiment, the September NonFarm payroll is expected to post a rise of 155k. The Jobs report is  facing an upside risk from tight claims, but balanced risk from the moderate 135k September ADP rise and divergent consumer and producer sentiment swings around stable levels on average, despite the September ISM drop. The strike disruption started after the BLS survey week, so we do not expect a payroll impact.

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