U.S. jobs reports are normally a key event, but will Friday’s indicator be outdated?
Here is their view, courtesy of eFXdata:
Danske Research discusses why this Friday’s jobs report might not be of that significance for market direction given that it’s inputs are already outdated.
“Normally, the US jobs report is considered perhaps the most important economic indicator, but the jobs report for March due out on Friday is already outdated before it is released. We know from initial jobless claims that there was a record spike of 3.3m in the number of jobless claims two weeks ago but this will not be reflected in the March jobs report. To understand this, one should look into the technical notes on how the jobs report is made. The jobs report is based on the pay period covering the 12th of the month, which is before the US really started to lock down. In this week, initial jobless claims ‘only’ rose by 60-70,000 more than a ‘normal’ week before the coronacrisis. If you had a paid job in this week, you are counted as having a job, regardless of what happened later in the month,” Danske notes.
We are likely to continue to see layoffs in coming weeks, as long as the US economy remains locked down, and hence the jobs report for April will be extremely negative. If claims have risen by another 3.5m, the April jobs report will show a decline in employment of at least 7m but, unfortunately, probably more. As the jobs report is already outdated, we do not expect it to be a major market mover this week. As mentioned, the focus is instead on the initial jobless claims due out tomorrow, Thursday.
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