NFP leading indicators: Disappointing Michigan Consumer Sentiment anticipates negative signal for US jobs report

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The United States Consumer Confidence Index, released by the University of Michigan, showed a final reading of 97.2, confirming a slowdown in the US consumers’ sentiment anticipated in the preliminary release. Following the government shutdown-induced dip from February, the UMich index had recovered its close-to-100 levels in March, but it has regressed a bit in April. That could correlate well with a possible regression in the labor market in March, which would mean the headline Non-Farm Payrolls number or the Average Weekly Earnings figures, to be released next Friday, May 3rd, would suffer in consequence. 

Our fundamental analysis guide to trade the US jobs report classifies the UMich Consumer Confidence Index as one of the ten leading indicators that provide some hints of the status and trend of the labor market. According to our NFP crash course, “consumer exuberance can translate into greater spending and faster economic growth. Therefore, a positive correlation is expected to the NFP numbers. As such, a high reading anticipates a strong NFP, if aligned with all the other indicators”.

The UMich Consumer Confidence Index is the fourth leading indicator released ahead of next week’s April US jobs report. Before this negative signal, we had got positive readings from the previous NFP release, the March ISM Non-Manufacturing PMI (its employment sub-component increased 0.7% from the Feb reading of 55.2), but a negative one coming from the latest JOLTS (Job Openings and Labour Turnover) indicator, which was released on April 9th and showed a retracement from 7.625 million to 7.087 in February.

You can check them out in our US jobs report pre-release checklist table:

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