Why it’s important?
In the Asian session, Eamonn published the range of estimates for today’s US NFP report. These ranges are important in terms of market reaction because when the actual data deviates from the expectations, it creates a surprise effect. Another important input in market’s reaction is the distribution of forecasts.
In fact, although we can have a range of estimates, most forecasts might be clustered on the upper bound of the range, so even if the data comes out inside the range of estimates but on the lower bound of the range, it can still create a surprise effect.
Distribution of forecasts
Non-Farm Payrolls
- 70K-220K range of estimates
- 135K-160K range most clustered
Unemployment Rate
- 4.3% (33%)
- 4.2% (63%)
- 4.1% (4%)
Average Hourly Earnings Y/Y
- 3.9% (3%)
- 3.8% (67%)
- 3.7% (30%)
Average Hourly Earnings M/M
- 0.4% (4%)
- 0.3% (71%)
- 0.2% (25%)
Average Weekly Hours
- 34.8 (3%)
- 34.3 (93%)
- 34.2 (4%)
We can see that the bias is skewed to the upside for the Unemployment Rate and following the latest US Consumer Confidence report a tick higher to 4.3% wouldn’t be surprising. It will be interesting to see whether it’s again just because of more labour supply or increased layoffs.