Will Non Farm Payrolls Surprise?

Non Farm Payrolls may surprise today. Since expectations are low, at -530,000, a better than expected figure is quite possible.  

Forex traders and economists expect a total fall of 1.5 million jobs in 3 months. Such a figure will be terrible news, yet again, for Americans. There are job cut announces everywhere. But did they already happen?

So, was  January really been so bad? I believe that actual job cuts have been as bad as the news about future job cuts. The future is of course near: Unemployment Claims this week were very disappointing, at  626,000, much worse than 585,000 that was expected.

To strengthen my argument, I look at the  ADP Non-Farm Employment Change. I’ve said in the past, that this figure should be always be taken with a grain of salt. It doesn’t always make a good prediction for NFP. But still, the last figure, for January, showed a fall of 522,000, less than 528,000.

The more interesting pointer to take from ADP, is the change from the previous month. In December, ADP showed a whopping fall of 659,000, and now it relaxed to 522,000. This is by no means a good figure, but it shows a slowdown in the deterioration of the American job market.

So, I believe that Non Farm Payrolls for January 2009 will be better than expected, lower than half a million job losses.  

But of course, this is only my prediction. For a deep analysis of today’s NFP, I recommend reading Kathy Lien’s piece.

We’ll soon see what the actual figure is. By the way, a good figure might not be good for the dollar, as in crisis days like these, a good figure may cause risk appetite, and send forex traders to take their chances on other currencies – not on the dollar.

Update 13:35 GMT: Apparently, I was totally wrong – NFP fell by 598,000, worse than expectations, especially mine!