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Non-Farm Payroll look-ahead

Non-Farm Payroll look-ahead

Today sees the release of the US Non-Farm Payroll (NFP) report for the month of May. As all traders are aware, the NFP data is the most important economic release of the month and generally leads to a sharp increase in market activity and overall volatility. Last month’s report for April has already gone down in history as one of the most devastating ever as the US economy saw the loss of  20.5 million jobs, 10 times the previous record decline in 1945, when the nation demobilized at the end of the Second World War. Similarly, the unemployment rate jumped to 14.7%, the highest since the 1940s. Overall, the National Bureau of Economic Research calculate that the data was the worst since the Great Depression.

Today’s Non-Farm Payroll number is undoubtedly another significant release. As we can see from our dashboards which use Smart News data to measure the commentary on social media, we’re seeing above average interest ahead of the release.

Analysts will be watching to see how much worse the unemployment situation can get. The consensus expectation is for a fall in payrolls of 8 million. Of course, 8 million is a lot better than the 20.5 million recorded in April. But it is an horrific addition to jobs already lost which should see the US unemployment rate hit 19.5%, or nearly a fifth of the population of the country.


Ridiculous as this sounds, the state of the US economy is of little interest to investors. The prevailing thinking goes that either the economy is going to snap back sharply once lockdowns are lifted, or the government and central bank will flood the markets with fiscal and monetary stimulus. Investors appear much more concerned by the ‘fear of missing out’ on an equity market rally than they do by the fear of a global economy fundamentally affected by the coronavirus and the political response to it.


A key question now is whether the Non-Farm Payroll release remains the most mentioned topic in financial circles against the background of civil unrest and an end to the coronavirus lockdown. To follow this and for further insights, make sure you keep a close eye on Smart News which you can access via your trading platform.


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