Non-Farm Payrolls: +80K, Unemployment Rate: 8.2% – Marginal Disappointment

The US gained 80K  non-farm jobs in June 2012. The unemployment rate stood on 8.2%.  Early expectations stood on a gain of around 100K and an unemployment rate of 8.2% in June. So, this is a disappointment, once again.

Forex reaction is risk off: USD/JPY falls to 78.55 and hardly recovers. EUR/USD falls to 1.2350 before stabilizing. Update: it now  resumes  the falls and dives below support at 1.2360, as low as 1.2330 so far.

Here’ more about the fall of the euro post-NFP – 5 debt crisis related reasons.

The data:

• Non-Farm Payrolls: +80K, lower than 100K expected.
• Unemployment rate unchanged at 8.2%, as expected.
• April-May net revisions: +1K
• “Real unemployment rate”, U-6, up from 14.8% to 1.4.9%.
• Participation rate remained unchanged at 63.8%.
• Employment-to-Population remained unchanged at 58.6%.
• Average Hourly Earnings +0.3%, higher than 0.2% expected.

Full BLS report is here.

What does the NFP result mean?

All in all, the report is a small disappointment, but not a disaster. The markets will likely return to focus on the European debt crisis. The next FOMC meeting is only at the end of the month, and event sin Greece are moving much faster.

This report is not impressing, but isn’t enough to trigger QE3: the unemployment rate is still at a trough, jobs are still being created and there are still other signs of growth.

With no fear of deflation and with long term yields at historic lows, it’s hard to see a motivation for more quantitative easing (aka dollar printing).

Background

Last month, the BLS reported a gain of only 69K jobs for the month of May and also revised previous figures to the downside. May’s numbers were revised now to the upside: 77K – quite marginal.

Data released for June released this week raised expectations, especially after the employment component in the ISM Non-Manufacturing PMI showed an improvement and ADP reported a big gain of 176K jobs in the private sector. Also other data pointed to a better picture. See more details in the NFP Preview.

EUR/USD was trading in a very narrow range: 1.2360 to 1.24 before the release. It reached these levels after the ECB cut both the lending and the deposit rate and painted a gloomy picture.  USD/JPY settled under 80 prior to the release.

The publication of the Non-Farm Payrolls is the “king of forex trading” – markets always rock quite wildly to the release.