US Non-Farm Payrolls for October 2013 rose by 204K, much more than expected. In addition, revisions added quite a few jobs. They were expected to show a gain of around 130K. As this was the month of the government shutdown, significant distortions were expected. The report was delayed by a week. The initial report for September showed a gain of 148K. This was now revised to 163K. The unemployment rate was expected to tick up from 7.2% to 7.3%. This is good news for the US and for the US dollar.
EUR/USD traded above 1.34 before the publication, recovering from the ECB blow. It is now below 1.34 once again. USD/JPY was around 98 and now it is close to 98.50. GBP/USD was around 1.6060 and now at around 1.6040.
The Data (updated)
- Non-Farm Payrolls: +204K, well above expectations September saw +148K before revisions)
- Participation Rate: 62.8% – seems distorted (63.2% last month, )
- Unemployment Rate: 7.3% (last month 7.2% before revisions)
- Revisions: +60K: September from 148K to 163K, Ausugst from 193K to 238K Last month saw a marginal change of +9K.
- Private Sector NFP: +212K, much better than expected (ADP showed +130K)..
- Real Unemployment Rate (U-6): 13.8% (previous: 13.6%).
- Employment to population ratio: 58.3% (previous: 58.6%)
- Average Hourly Earnings: +0.1%,
- Average workweek: 34.4 (Last month: 34.5 hours).
More data: Personal income rose by 0.5%, consumption by 0.2% and Core PCE prices by 0.1%. Personal income exceeded expectations.
Market Reaction and Analysis
- Before / After / Comments
- EUR/USD 1.3420 / 1.3370 / EUR/USD even fell lower. It is still recovering from the ECBlow.
- GBP/USD 1.6070 /1.6020 / The pound remains resilient, and has good reasons.
- USD/JPY 98 / 98.50 / the pair is trying to break out of consolidation.
- AUD/USD 0.9460 / 0.94 / The Aussie doesn’t like the smell of tapering.
- NZD/USD 0.8340 / 0.8295 / The kiwi is sensitive to tapering, like the Aussie.
- USD/CAD 1.0450.
- USD/CHF 0.9160
The data for October was expected to be very confusing due to the effect of the government shutdown. The exact manner of counting furloughed workers was unknown. Some can appear as unemployed, out of the work force or at work as usual. Despite the expected distortion, the NFP always moves markets.
Data preceding the publication was mixed: while ADP showed a weak gain in jobs, the all-important ISM Non-Manufacturing PMI raised expectations.
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