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Monday, June 21, 2021

By the numbers, starting with one million jobs

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What’s expected for the April 2021 non-farm payrolls report

jobs meme
  • Consensus estimate +1000K
  • Private +938K
  • March +916K
  • Highest estimate +2100K (Jefferies)
  • Lowest estimate +700K (Prestige Economics)
  • Average estimate +1035K
  • Standard deviation +203K
  • Unemployment rate consensus estimate: 5.8% vs 6.0% prior
  • Participation rate consensus +61.6% vs 61.5% prior
  • Prior underemployment U6 prior 10.7%
  • Avg hourly earnings y/y exp -0.4% y/y vs +4.2% prior
  • Avg hourly earnings m/m exp 0.0% vs -0.1% prior
  • Avg weekly hours exp 34.9 vs 34.9 prior

If this were to hit the high estimate, that would really be something but what stands out in these numbers to me is the standard deviation in estimates. That’s big number and highlights the uncertainty in this report. Statistically, a miss by that much wouldn’t be a big deal but there’s a market kneejerk to a +/- 200K miss that’s almost guaranteed.

Also, watch participation closely. The Fed wants to see people pulled back into the workforce before it even thinks about tightening.

Here’s the April jobs story so far:

  • ADP +742K vs +850K expected (prior 565K)
  • ISM services employment 58.8 vs 57.2 prior
  • ISM manufacturing employment 55.1 vs 59.6 prior
  • Initial jobless claims survey week 566K vs 765K in March
  • Conference Board help wanted online demand for hiring 108.5 vs 105.7 prior
  • Challenger Job Cuts 22.9K vs 30K prior (was 671K a year ago)

The ADP report undershot last month by almost half so I wouldn’t take much from this week’s miss. Overall, there is plenty to reason to be optimistic as April was a major reopening month and companies are enthusiastic about summer business. I tend to think that economists lean to the conservative side when it looks like a big number is coming. I’ll take the upside and that should boost USD/JPY and USD/CHF on the headlines.

CAD traders should note that Canadian employment will be released at the same time with the consensus at -162K.

April non-farm payrolls preview

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