U.S. January Employment Report Preview

The U.S. Bureau of Labor Statistics is due to release the pivotal December Employment Report on Friday at 8:30 a.m. EST.

Analysts expect the January unemployment rate to remain at the five-year low of 6.7 percent that was reached in December.

Nonfarm payrolls (NFP), which measures the change in the number of people employed during the previous month, excluding workers in the farming industry, are expected to rise to 185K from December's reading of 74,000.

December's NFP figure missed expectations of 196.000 by a broad margin; coming in at only 74,000, the smallest gain in three years, triggering a sharp selloff in the U.S. dollar. Many analysts pointed out that the unusually cold weather likely played a role in the slowdown in U.S. job growth.

ADP Misses Expectations

The ADP National Employment Report, released by payroll processor Automatic Data Processing, is a measure of the monthly change in non-farm, private employment, based on the payroll data of roughly 400,000 U.S. businesses. The ADP release is widely regarded by analysts as having a degree of predictive value in gauging the outcome of the BLS nonfarm payroll report to be released on Friday.

On Wednesday, the U.S. dollar traded lower after ADP Nonfarm Employment Change came in at 175K, missing analyst expectations of 180K. The prior reading was revised lower to 227K.

Initial Jobless Claims Beat Expectations

The Initial Jobless Claims figure shows the number of first-time claims for jobless benefits in the United States, covering the week ending the prior Saturday.

The Department of Labor reported on Thursday that Initial Jobless Claims came in at 331K, beating analyst expectations of 337K.

Continuing claims shows the number of unemployed people who qualify for and are currently receiving unemployment benefits.

Continuing claims came in at 2,964K, beating expectations of 2,998K.

The Jobless Claims report is important in that it provides insight to the level of job growth nationwide, an important factor in the health of the economy.

Federal Reserve Monetary Policy

In late January, following Ben Bernanke's final meeting as chairman, the Federal Reserve announced that it will continue to taper its bond-buying program with a reduction to $65 billion in February from $75 billion in January.

Addressing the decision to taper and the weak December employment report, the Federal Reserve stated; "Labor market indicators were mixed but on balance showed further improvement."

The Fed also noted "growing underlying strength in the broader economy."

The reduction of stimulus was widely expected by analysts and the U.S. dollar traded higher in the wake of the news. Analysts expect the Fed to taper stimulus again at the next meeting in March, at which current Vice Chair Janet Yellen is set to preside as chairperson.

U.S. Dollar Index Daily Chart

Looking at the U.S. dollar index daily chart we can see that price retreated sharply on Thursday morning ahead of the key employment data to be released on Friday.

 

 

 

 

 

 

Posted In: NewsEventsEconomicsFederal Reserve
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...