Previewing Today's Nonfarm Payrolls Number: The Key Things To Look For

Tyler Durden's picture


Courtesy of RanSquawk, here is a summary of what the Street expects will happen today. Keep in mind, following yesterday's ADP blowout number (always wrong, yet still somehow having credibility), the whisper number is about 30-40K higher. The market consensus is for a +215k NFP report and 6.3% unemployment. In terms of renewed optimism, we've been here many times before in this cycle. As Deutsche Bank's Jim Reid observes, "given the weather distortions it was always inevitable that there would be a Q2 data spurt at some point. But will it be sustainable? The market might not put quite as much weight on data now as they will in say August/September when surely the weather impact will have been completely worked through by then."

Far more important than the headline NFP print will be average hourly earnings (expected to rise just 1.9%, below last month's 2.1%) for those keeping tabs on wage inflation (as opposed to yet again soaring food and energy inflation): recall that as we reported two weeks ago, not only have real hourly earnings declined for two months in a row, but are now back to Lehman levels. Absent some real pick up in wages, the only possible outcome for the US now that cost-push inflation is rearing its ugly head, is nothing short of stagflation.

From RanSquawk

Preview summary:

  • US Change in Nonfarm Payrolls (June) M/M Exp. 215K (Low 145K, High 290K), Prev. 217K, April 288K
  • US Unemployment Rate (June) M/M Exp. 6.3% (Low 6.2%, High 6.4%), Prev. 6.3%, April 6.3%; Labor force participation rate prev. 62.8%
  • Today’s number is not expected to alter the future course of Fed monetary policy
  • Focus will once again fall on any sign of wage growth as an indication of tightening of slack in the labor force

Breakdown by bank:

  • Citigroup 190K
  • HSBC 200K
  • Goldman Sachs 210K
  • UBS 215K
  • JP Morgan 220K
  • Deutsche Bank 225K
  • Bank of America 225K
  • Barclays 250K

With Fed policy now on a steady path and their QE program due to end in October or December, even if today’s reading shows a significant beat or miss on expectation it is not expected to change the course of future FOMC action, although has the potential to adjust expectation of the rate hike timeline. A significant beat is very possible after yesterday’s ADP employment change came in at 281K, leading some analysts to change their forecast for today’s reading and speculate over a potential +300K reading. However, focus will once again fall on any sign of wage growth as an indication of tightening of slack in the labor force, with analysts suggesting the current 2.1% average hourly earnings remains well below the long-term trend of 3.5%.

The unemployment rate is expected to remain on hold at 6.3% for the third consecutive time, and follows a note from the BLS last month that labor force re-entrants partially recovered the big April loss, although participation continues to remain low (62.8%). Ahead of today’s release it’s worth noting that the 6-month average for the main nonfarm payrolls reading continues to reside above 200k, with last month’s reading taking the jobs recovery total above pre-recession highs.

Market Reaction

With the S&P 500 and DJIA trading just off record highs, 17,000 will be closely eyed in the DJIA which could be breached at the Wall Street open following a better than expected jobs report (DJIA future still well below with FV at -82), and the next significant level in the S&P is at the psychologically important 2,000 (record high currently 1978.58). Although the median expectation for the headline NFP is 215K, markets are expecting an even higher reading following a big ADP beat of 281k yesterday, particularly as a higher NFP headline has been seen vs. ADP over the past five consecutive months. As equities have rallied at the start of the new quarter, USTs have seen selling pressure and the yield curve has steepened, although markets are still pricing in the first Fed Fund Rate (FFR) hike in July 2015 (34% probability). In currency markets the USD-Index trades back below 80 after a breach below at the end of last week, and a break back above could mean at test of the 100DMA at 80.04, and also lead to selling pressure in precious metals.

One key footnote is that the jobs report will be released alongside a slew of economic data including US weekly jobs, trade balance, and the post-rate decision press conference from ECB President Draghi.

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Thu, 07/03/2014 - 08:06 | 4920883 So Close
So Close's picture

Fake numbers holding up fake markets.

Thu, 07/03/2014 - 08:07 | 4920890 buzzsaw99
buzzsaw99's picture

i don't know what the fake number will be but i do know that it will be BULLISH

Thu, 07/03/2014 - 08:16 | 4920913 Sudden Debt
Sudden Debt's picture

looking to gold and silver now it will be "better than expected"

Thu, 07/03/2014 - 08:06 | 4920884 Bernoulli
Bernoulli's picture
  • Citigroup 190K
  • HSBC 200K
  • Goldman Sachs 210K
  • UBS 215K
  • JP Morgan 220K
  • Deutsche Bank 225K
  • Bank of America 225K
  • Barclays 250K


  • Bernoulli Bank: 295K
Thu, 07/03/2014 - 10:27 | 4921361 Bernoulli
Bernoulli's picture

Bernoulli Bank vs. all the other bullshit banks 1:0

Thu, 07/03/2014 - 08:06 | 4920886 mayhem_korner
mayhem_korner's picture



Key things to look for:

  • lies
  • fabrications
  • seasonal "adjustments"
  • all of the above
Thu, 07/03/2014 - 08:11 | 4920899 TheRideNeverEnds
TheRideNeverEnds's picture

Numbers good = great news, recovery summer five go!  e-minis----> the moon


Numbers bad = great news; it was just the bad weather, recovery summer five go!  e-minis----> the moon

Thu, 07/03/2014 - 08:12 | 4920902 thismarketisrigged
thismarketisrigged's picture

just remember guys, and this applies for the july jobs report more so, but if the job number is weak for july, its due to hurricane arthur, not due to a weak economy.


people will not have been hiring because they needed to leave work early to go prepare.

Thu, 07/03/2014 - 08:14 | 4920905 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

Thing to really look for..Dow at all time highs ---> 17k...sheep will feel good going shopping this weeked then. Keep spending that money, bitches.

Thu, 07/03/2014 - 08:14 | 4920906 1835jackson
1835jackson's picture

Unless the pitchforks are out in force no one fucking cares. 

Thu, 07/03/2014 - 08:15 | 4920907 mayhem_korner
mayhem_korner's picture



If I owned one of the high-end watering holes in the financial canyon of Wall Street, I'd be prepping my staff for a blowout day.  All that is needed from the BLS is a juicy fake-print number to trigger the algos to push the "markets" to new highs just before the 4th.  By 1500 hours, the traders and their back-office compadres will be overtaken by their exuberance.  I can envision one of those $90K bar tabs making headlines.

Thu, 07/03/2014 - 08:15 | 4920908 1835jackson
1835jackson's picture

Don't forget the coke and hookers!

Thu, 07/03/2014 - 08:16 | 4920911 youngman
youngman's picture

Here in Colombia..the President declared tomorrow a holiday so the people can watch the soccer that is funny

Thu, 07/03/2014 - 08:18 | 4920915 Sudden Debt
Sudden Debt's picture

over here, everybody was allowed to show up to work the next day with a hangover :)

no kidding :)

Thu, 07/03/2014 - 08:20 | 4920916 kurzdump
kurzdump's picture

Bread and circuses

Thu, 07/03/2014 - 08:27 | 4920928 _ConanTheLibert...
_ConanTheLibertarian_'s picture

That would really be funny because the US is out of the world cup (thanks to Belgium).

Thu, 07/03/2014 - 08:20 | 4920919 NoWayJose
NoWayJose's picture

These numbers are being brought to you by the same guys that brought you the pre-election employment numbers in 2012. Look for big numbers for the next 4 months.

Thu, 07/03/2014 - 08:24 | 4920923 Ness.
Ness.'s picture

Regardless what the number is, buy stawks - sell gold.  You know that is what K-Hen and the boys will be doing today.  Oh yeah, sell VIX en masse - no need for protection going into a long weekend, silly.  


Do I need the /sarc here?

Thu, 07/03/2014 - 08:27 | 4920927 Bosch
Bosch's picture

And for even more bullish news we can blame the shitty Q3 GDP number on rainstrom Arthur on July 4th weekend. 

Thu, 07/03/2014 - 08:32 | 4920939 JustObserving
JustObserving's picture

6.1% official unemployment.  Shadowstats has unemployment at 23%.

Thu, 07/03/2014 - 08:33 | 4920945 kurzdump
kurzdump's picture

Negative unemployment rates by 2020.

Thu, 07/03/2014 - 08:33 | 4920943 MFL8240
MFL8240's picture

Can pull a number out of my ass will be just as truthful!

Thu, 07/03/2014 - 08:35 | 4920948 Angelo Misterioso
Angelo Misterioso's picture

Bernoulli wins a gold star!

Thu, 07/03/2014 - 10:28 | 4921365 Bernoulli
Bernoulli's picture

Thanks. Was just a lucky guess.

Where can I get my medal?

Oh I forgot, nobody will ever be held accountable to what they are estimating before the numbers come out...

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