February Non-Farm Payrolls Preview
March 5, 2009
Tomorrow is Non-Farm Payrolls day and the market is forecasting a -650k decline in payrolls. If the herd is correct, this would be the largest amount of losses in 6 decades!
There is no question that the labor market is weak and there were massive job losses in February but will it really be as bad as the market expects? I don’t think so. In my extensive February non-farm payrolls preview, I argue that NFPs could rebound! The amount of job losses last month should be less than the -598k decline in January.
Why? Because the employment component of service sector ISM told me so. Over the past 10 years, the index has had an 82 percent positive correlation with non-farm payrolls. In other words, it has accurately forecasted payrolls 82 percent of the time! Take a look for yourself!
Source: Bloomberg
The last time this baby rebounded was in Dec 2008 and NFPs dropped by -577k compared to -597k the previous month.
So the NFP number will be bad, the unemployment rate should break 8 percent and more than 4 million people have lost their jobs since January 2008, but at least I think less people received pink slips in February.
This is a snippet of my full non-farm payrolls preview and my extensive arguments for why non-farm payrolls could rebound in Feb.
Posted in forex blog, non-farm payrolls
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March 5th, 2009 at 10:26 pm
excellent analysis. I’d never heard of the Monster.com index, but it makers great sense. I look forward to seeing risk appetite return, at least for a while. that would benefit equities, EUR, AUD, CAD, NZD, GBP. neutral to CHF, JPY, and bad for $.
March 6th, 2009 at 12:24 am
So Kathy, have u got any advice about any pair/currency we should avoid or focus.
March 6th, 2009 at 6:42 am
In the time of economic crises, Economy of all the country is not so good.
“GBP will grow up at this month or next”
March 9th, 2009 at 12:09 am
good article kathy:-)
Well, considering that most economies are using the USD as the exchange rates standard.. it is good to also to consider that all the other currencies are directly affected by the USD downtrends.
As far as I am concerned, forex is a friend of no one. It goes to where it wants to go and NFP is one of the most important announcement for forex traders.