After last month NFP have widely surprised Wall Street analysts (and also Canary Wharf’s ones, let’s say) that were expecting a further decrease of around 8.000K payrolls (with some big banks expecting numbers as high as -12 million) we tried to crunch some numbers. By the way, the May relative data came in with an increase of 2.509.000 employed people, as for the US Bureau of Labor Statistics.
Payrolls topped up in 02/2020 when 152.463.000 American were officially taken into account as working: since then, almost 20 millions people have disappeared from the official statistics, taking the number down to 132.912.000 monthly payrolls. Since 03/2020 more than 45 million people have applied for new initial claims.
The NFP statistic has a Public and a Private component: the latter one is widely the most important, counting for about 84% of the total. BUT: the public sector has been the one that made up the last number. While the private sector destroyed another 2.75 million jobs, the State employed more than 5.2 million people, taking the overall number to be positive. Has the administration been in need of so many people once again in June?
We’ve also noticed another point trying to stick to the data: the correlation since 2019 with Continuing Jobless Claims (resampled to a monthly basis) has been higher that the one with Initial claims, close to 95% (obviously inverted -so negative)
So we think looking at the Claims can better help us forecasting (or getting close, at least) to tomorrow’s NFP. And what we see is that while 18.178.000 people are not counted anymore as receiving a payroll, almost 20 million are still continuously asking for national job insurance.
We think it will be quite hard for the real number to come out close to the current consensus of +3.000k.
What an eventual surprise could mean for the USD? The last 4 to 5 sessions DXA has been rising, reaching an important level where technically a trend line is waiting for it: if this one is wiped out, there could be more upside for the USD and consequentially, some risk-off in equities.