NFP comes in below expectations!

BY Janne Muta

|August 4, 2023

The latest NFP data comes in lower than expected with only 187K jobs added as against the anticipated 205K. This lower number is a continuation of the US jobs market cooling down (prior: 209K). The unemployment rate came in at 3.5% vs 3.6% expected with the participation rate unchanged at 62.6% (62.6% prior).

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The Average Hourly Earnings have ticked higher, standing now at 0.4%, higher than the expected 0.3%. On the annual level earnings at 4.4% y/y vs +4.2% expected raises the question of whether this data could increase expectations about future inflation and Fed policy.

The initial market reaction has been to sell the dollar and buy the stocks. This indicates that both currency and equity traders are focusing on the headline employment number and take it as a confirmation that the Fed isn’t hiking the rates any time soon. The initial reactions aren’t always a reliable indicator of market direction though. It makes sense to wait for the New York open though to see how the wider trader and investor base sees today’s numbers impacting the markets.

Trade Safe!

Janne Muta
Chief Market Analyst

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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