The US gained 115K jobs in April, and the unemployment rate is at 8.1%. Early expectations stood on a gain of around 173K and no change in the unemployment rate, at 8.2%. Last month’s gain was revised to the upside: +154K instead of +120K. This is a significant +34K rise. February was revised from +240K to +259K. If revisions would be printed now, the total gain would be +168K. It could be worse.
Yet again, there is a divergence between weaker than expected NFP and better than expected unemployment rate. EUR/USD is trading very choppily between 1.3145 and 1.3114, just above support at 1.3110. More: Euro dollar forecast. Update: the pair is moving higher, touching 1.3155. Things may change over and over again.
All in all, the dollar reacts with a marginal drop so far.
The “real unemployment rate”, U-6, is at 14.5% – no change from last month. Average Hourly Earning are unchanged, below expectations of +0.2%.
As the weather was highly debated, we look also at the not seasonally adjusted unemployment rate (official rate, U-3): it dropped sharply from 8.4% to 7.7%. The not-adjusted “real unemployment rate” dropped sharply from 14.8% to 14.1%.
The participation rate dropped to 63.6%. Employment to population didn’t change much.
Here’s how to trade the Non-Farm Payrolls with EUR/USD.
Indicators Pointed Lower
The indicators released towards the release were leaning lower: the biggest US sector, services, showed slower growth, including in employment, according to the ISM Non-Manufacturing PMI. Also the ADP report for the private sector was weak, with a gain of only 119K jobs.
Positive signs came from the smaller manufacturing sector, which enjoyed stronger growth and a very healthy employment component according to the PMI, and from a drop in jobless claims back to 365K, after three bad weeks.
As always, data from previous months is revised. The initial read for March stood on a gain of 120K, a disappointing figure, but a drop in the unemployment rate to 8.2%.
There was a long debate if this fall is a one time event compensating for warm winter months, or a change in trend. I then listed 5 reasons why the fall might be temporary.