logo
Analysis

US nonfarm payroll 311K vs 224K expected!

BY Janne Muta

|Maret 10, 2023

The NFP came in higher than analysts expected. This, however, wasn’t a surprise to us given the fact that the recent employment-related data have been so strong. Plus, throughout the last year, the analyst consensus has been much more pessimistic about the health of the jobs market in the US.

Inline Question Image

But, even though the headline number in this report is much better than expected the average hourly earnings disappointed and the hours worked were softer than before. On top of this, the unemployment rate ticked higher. This indicates there are internal weaknesses in the labour market that are starting to show in this report but not yet in the headline number.

For instance, jobs in the technology industry were lost. This, however, doesn’t show yet in the employment report as it takes 60 to 90 days for them to claim. So the growth in the headline number must have come from hiring in lower-wage jobs. The fact that the earnings were down supported the idea.

Market reactions have been interesting. Bonds rallied sending the yield and the dollar lower and risky assets higher. It seems that the market participants are more focused on earnings data and the recent bank scares with sharp deposit decline in the Silicon Valley Bank. If people start losing their faith in banks then the Fed has to think twice whether it can keep on fighting inflation as higher rates would drive bond prices lower which in return would deepen the losses banks have from holding those bonds.

Inline Question Image

This could create a spiral in which the Fed would soon have to deal with a banking crisis that could be only solved by loosening monetary conditions. That’d be a classic catch-22 situation where the Fed would be feeding inflation by loosening monetary conditions if they lower the rates but increase the risk of liquidity problems for banks if they keep on fighting the inflation.

Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

DISCLAIMER TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval. FX and CFDs are leveraged products. They are not suitable for every investor, as they carry a high risk of losing your capital. Please ensure you fully understand the risks involved. All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated.

Join us on social media

image-35e46d7235a6e5e76853cfbb4fdb2b38d7e320d8-150x150-png
Janne Muta

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

24/7 Live Chat

Trade responsibly: CFDs are complex instruments and come with a high risk of losing all your invested capital due to leverage.