The basic milestone over recent months is whether headline (private and government) NFP hits 200k or over. We can see that recent months have not only been below this milestone but job creation is decelerating. That is not to say that we have seen a turning point as you can see from the longer-term trendline (purple) that the trend is higher. However we do appear to be going into this moth on the back foot with forecasts now below 200k, at 180k. If we hit consensus this will be the 4th consecutive month below 200k, a stat which has not occurred since 2012.
I have highlighted potential for weakness to appear in the headline NFP number in a few months from now if the trend within manufacturing employment continues to decline. However as a leading indicator we observe how subsequent releases come out and compare alongside NFP data for a better overall gauge of US job creation (or potential for lack of...).
Unemployment continues to look strong with the US continuous jobless claims backing up the data. It is expected to remain at the multi-year low of 5.1% and if there are any changes then it would take a drastic increase for the markets to take much notice. Typically it changes by 0.1%, so for me the unemployment rate is not likely to be the market mover.
Taking the previous 104 'actual' data points we can see that 228.5k jobs created falls within one standard deviation of the entire sample set (so approxiately 68% chance of the read comeing on or below this number).
The loose benchmark we have been looking at for the past two years is if it comes above or below 200k, but is interesting to note that the median is in fact 123k.
In previous analysis I have observed that we probably need to see at least a deviation of 60k away from consensus (above or below) to expect more meaningful moves from global markets. Obviously the further away the actual read deviates away from expectations, the larger ripples we can expect these but the less frequent the event will occur.
Taking this a step further I calculated the difference between actual and expected and then put through the same process of a histogram and basic stats. Using this approach shows that 75k differential falls within 1 standard deviation, so there is a 68% probability that today’s Nonfarm figure will fall between 142.5k and 217.5k of the 180k forecast. However to expect a more meaningful move I would want to see over 240k or below 120k printed.