Forex News Preview: US Employment will be released at 8:30 ET

The US Unemployment statistics will be released today at 8:30 ET. The expectations are for a gain of 65,000 jobs in the key NFP figure.  This may have been moved up a bit on the back of the ADP report on Wednesday which showed a gain of 130,000.   Since ADP does not include Government workers their figure is implying a gain of 155,000 (government adds 25,000 jobs on average per month).  Last month the figure was 18,000.  The 6 month average gain has been 87,000.

The unemployment rate spiked up to 5.0% last month.  Expectation is for it to remain at 5.0% this month.  The unemployment rate will be key as it is the most visible to businesses.  Businesses tend to think as a group. If they see the unemployment rate start going up, all businesses tend to lay off people (accelerating the move).   The 5.0% rate is moving up slowly up but is still below recessionary levels during the 2001-2002 period (see chart below).  A number today that is 5.2% or higher would be worrisome to the Fed as it may start the upward momentum in the rate going forward. 

The Average Earnings M/M are expected to rise by 0.3% after rising 0.4% last month.  Y/Y the earnings is expected to show a gain of 3.9% from 3.7 last month.  Average weekly hours is to be at 33.8 unchanged from last month.  Manufacturing jobs are expected to show a decline of 20,000 jobs versus 31,000 jobs last month.  I would expect Financial sector jobs to decline this month as well.  The sector has been down for 5 straight months. Healthcare should continue to add jobs (they add 30,000+ jobs on a regular basis). Construction jobs have declined for 6 straight months with -179,000 jobs lost in that time period.  A slowing of the decline might cause an upward surprise in the NFP (due to layoffs slowing - not strength in the sector).

The final point is that January has some lofty seasonals (as we have seen in the Initial Claims release), so the figures has the potential to surprise.