Nonfarm Payrolls Preview

Tyler Durden's picture


From RanSquawk

US Change in Nonfarm Payrolls (Jun) M/M Exp. 165K, Low 77K, High 220K (Prev. 175K, Mar. 88K)

US Unemployment Rate (Jun) M/M Exp. 7.5%, Low 7.4%, High 7.7% (Prey. 7.6%, Mar 7.5%)

Bank NFP Estimates:

  • Deutsche Bank: 145K
  • Barclays: 150K
  • UBS: 150K
  • Goldman Sachs: 150K
  • JPMorgan: 150K
  • HSBC: 155K
  • Citigroup: 160K
  • Bank of America: 165K

Last month's Nonfarm Payrolls beat expectations coming at 175k vs. Exp. 163k with the unemployment rate unexpectedly rising to 7.6% vs. Exp. 7.5% albeit attributed to an increase in the participation rate. Since then we have seen a mixed picture with the employment component of Monday's ISM report falling to the lowest level since September 2009 and Wednesday's surprising higher than expected ADP private sector jobs report which showed a 188k increase in jobs against the 160k expected. It's worth noting that recently the ADP jobs report has proved less useful as a guide to payrolls, since the start of using new methodology in October.

The bulk of estimates lie between150k to 165k, which is below the current six month average of 199.33k. Nevertheless, the average remains near 200,000 for a fourth consecutive month which is significant as the Fed has previously emphasized their focus to cumulative improvement in the labour market and not in the latest figures. Historically, June's NFP has tended to be weak, possibly reflecting the difficulty in seasonally adjusting data for the entry of students and exiting of teachers and related support jobs like bus drivers, cafeteria and safety workers ahead of the summer vacation.

Although the scrutiny of recent job reports has somewhat been overblown, today's release will be keenly watched as investors face up to the prospect that the Fed may begin to scale back QE within the next few meetings. This follows Fed's Bernanke's June 19th FOMC press conference where he also said any change in asset purchases "would reflect the incoming data and their implication for the outlook"

Market Reaction

As was the case last month, a better than expected reading could see initial strength in equities and downside in Treasuries. However, a better reading does heighten the likelihood that the Fed will move to taper QE, hence such a move could be short-lived and we could see a broad based sell-off in T-notes and equities with the prospect that the Fed begin to reduce the level of liquidity pumped into the markets. Conversely, a worse than expected number, especially in the unemployment rate climbs, will shift expectation of QE for longer and hence it is likely upside will be observed in Treasuries, equities and spot gold. In precious metals, Spot gold has fallen over 14% to trade at the lowest levels since Aug 2010 since Fed's Bernanke's press conference, weighed on by strength in the USD with the Greenback having rallied over 4% in the same time period.

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Fri, 07/05/2013 - 07:54 | 3723001 fonzannoon
fonzannoon's picture

i hope it's 600k and the 10yr goes to 4.5%

Fri, 07/05/2013 - 08:15 | 3723033 Manipuflation
Manipuflation's picture

19.99 percent on three month.  Any reason why not? :-)

Fri, 07/05/2013 - 08:19 | 3723040 GetZeeGold
GetZeeGold's picture



I'm just looking for some razzle dazzle.

Fri, 07/05/2013 - 08:36 | 3723095 Manipuflation
Manipuflation's picture

Well, I have a pocket full of shotgun shells...just need a target now.

Fri, 07/05/2013 - 09:05 | 3723196 spine001
spine001's picture

If money velocity picked up with a 600k reading we'd be in a world of hurt. Youth would be in great shape, since they can survive hyperinflation while the rest of us have already seen our saving years gone to waste. The biggest issue for society then would be the exposure on generational, moral hazard. Hard work and saving would be proven forb generations to come to be the wrong path to take in life. That would not be good for the owners of the debt serfs. There the conundrum.

By the way the job number is nmot the one that truly matters, only for headline. For economic prediction purposes you need to use the headline number times the average number of hours worked times the average hourly compensation. That is the real amount of extra money that reaches the consumers.

Fri, 07/05/2013 - 08:33 | 3723084 Headbanger
Headbanger's picture

Ypu almost got it...  195K and 10 year spiking higher

Fri, 07/05/2013 - 08:02 | 3723008 insanelysane
insanelysane's picture

Its gotta come in at 250k or higher.  They need people to feel good about spending money during the Summer of Recovery IV.

Fri, 07/05/2013 - 08:17 | 3723037 The Master
The Master's picture

I think its gonna come in 200K+. ECB and BOE actions yesterday were clearly a coordinated effort to offset a "blowout" NFP today and its hawkish implications.

Fri, 07/05/2013 - 08:22 | 3723050 fonzannoon
fonzannoon's picture

That would be spectacular. I'd love to see the dollar soar vs every other currency. Watch prices actually begin to fall for consumers. Then have our dear leaders tell us that's bad.

Fri, 07/05/2013 - 08:25 | 3723054 Non Passaran
Non Passaran's picture

That would cause the markets to crash. My guess is 180K low quality jobs.

Fri, 07/05/2013 - 08:03 | 3723011 jmcadg
jmcadg's picture


Smash on the metals guaranteed.

Fri, 07/05/2013 - 08:09 | 3723018 Quinvarius
Quinvarius's picture

I don't think that is the biggest dick move they could come up with regarding that space.

Fri, 07/05/2013 - 09:02 | 3723206 gaoptimize
gaoptimize's picture

Good call.  Close to correct for the right reasons.

Fri, 07/05/2013 - 08:08 | 3723016 Racer
Racer's picture

They are all fake jobs anyway, and more than likely they already know the pretend numbers

Fri, 07/05/2013 - 08:08 | 3723017 el-kalif
el-kalif's picture

would say miss like 135k + past data revised (metals smashed anyway)

Fri, 07/05/2013 - 08:09 | 3723019 ZippyBananaPants
ZippyBananaPants's picture

80k. This allows cnbc to continue to baffle everyone with bullshit. End of the day nobody knows anymore than now.

Fri, 07/05/2013 - 08:10 | 3723020 prains
prains's picture

Alberta does this in a month

Fri, 07/05/2013 - 08:12 | 3723021 Divine Wind
Divine Wind's picture




I love it.

Each month the numbers are released and market action take place in the desired direction.

Then the numbers are "corrected" (always down).

What a bunch of bunk.


Fri, 07/05/2013 - 08:14 | 3723028 JustObserving
JustObserving's picture

The Nonfarm Payrolls is heavily massaged to produce the number most favorable to the economy.  If the Fed is worried about interest rates rising, they will produce a number below consensus.  So maybe a number like 125K or lower will help the bond market and the US economy the most - so that is the number that will be produced.

Fri, 07/05/2013 - 08:14 | 3723032 MyBrothersKeeper
MyBrothersKeeper's picture

210k is my wild guess

Fri, 07/05/2013 - 09:02 | 3723208 gaoptimize
gaoptimize's picture

Good call.

Fri, 07/05/2013 - 08:16 | 3723034 buzzsaw99
buzzsaw99's picture

fascist gubbermint numbers are so exciting [/sarc.]

Fri, 07/05/2013 - 08:18 | 3723039 sphindog
sphindog's picture

If the big picture is USD parity with the Euro, I say we see 140k...and the market tanks. Long live King Dollar...for a month or two!

Fri, 07/05/2013 - 08:23 | 3723051 Ghordius
Ghordius's picture

and where does this "big picture" come from? the Squid? PPP? or from where Anglo-Irish bankers took their numbers?

Fri, 07/05/2013 - 08:33 | 3723083 sphindog
sphindog's picture

I guess parity isn't the big picture.

Fri, 07/05/2013 - 08:19 | 3723043 gaoptimize
gaoptimize's picture

I'd be interested in having zerohedge track the accuracy of the projections by these banks.  Also, can we get payroll withholding at the same time?

Fri, 07/05/2013 - 08:30 | 3723073 Confundido
Confundido's picture

If gold doesn't break $1,260/oz today, expect to test $1,180/oz and possibly all the way down to $1,000/oz

Fri, 07/05/2013 - 08:30 | 3723075 el-kalif
el-kalif's picture


Fri, 07/05/2013 - 08:35 | 3723088 goldenbuddha454
goldenbuddha454's picture

silver droppin like a rock


Fri, 07/05/2013 - 08:35 | 3723091 thismarketisrigged
thismarketisrigged's picture

195,000, ha ha ha , ya thats a believeable number.


how many of those people are working 5 hours a week and counted as ''jobs added''.


if things are so good, why the fuck does the fed need to still be involved?


everything is good, europe is cured, china is cured, japan is cured, u.s is cured, what a fucking joke,

Fri, 07/05/2013 - 08:35 | 3723092 Nue
Nue's picture

Oh Boy! I can't wait to see what bullshit number they pull out their ass today.

Fri, 07/05/2013 - 08:37 | 3723100 thismarketisrigged
thismarketisrigged's picture

also, whenever all these ''experts'' expect a bad number, it always ends up good, and vice versa.


what a farce.

Fri, 07/05/2013 - 08:45 | 3723136 Yen Cross
Yen Cross's picture

     The eur/usd posted a low 0f 1.2811 on the release. I'll bet the SQUID and Tommy Stolper are sweating bullets right about now. Let's take bets on when their 1.2800 s/l gets hit.

Fri, 07/05/2013 - 09:02 | 3723205 muleskinner
muleskinner's picture

195,000 more beer truck drivers is what is needed the most of all.


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