Forex News: US Employment report due at 8:30 AM

At 8:30 AM the US will release the employment statistics for the month of February.  Last month, the unemployment rate fell to 4.9% from 5.00%.  The rate has been trending up since the low of 4.4% in March 2007.  However, in relation to prior recession periods, the level remains low, and the rate of change higher, has been less dramatic. 

The change in Non-Farm Payroll jobs will also be released.  Last month, the number of non farm jobs created declined for the first time since August of 2003 – falling by 17,000 jobs.   

Once again, the trend is worrisome but as a comparison, the NFP declined for 15 straight months in 2001 and 2002 and 27 of 34 months from October 2000 to August 2003. 

These trends in the Unemployment Rate and Non Farm Payroll are a bright spot which keeps economists and Fed officials optimistic that the US will avoid a recession even as the credit and housing markets have unprecedented problems.   Nevertheless, the current job situation can be good or bad.   The good is that a deep recession will indeed be avoided if people can stay employed which may allow the housing and credit situation to work itself out over time.   The bad is that the next shoe could drop if momentum of job declines starts to pickup.  If so, the bad from employment losses, could just be starting, and the expectation would be for an acceleration of the current US problems. The expectations for this months employment is for the level of growth in US jobs to continue to stagnate with an expected increase of 25,000 jobs and the employment rate to return to the 5.0% region.  This scenario is not great but it does not support an employment or economic disaster.  

On the other hand, if there is a pickup in the employment rate to 5.2-5.4% region with another negative non-farm payroll figure, it would sufficiently worry the market that the next shoe is falling.

The market will also be looking at the hourly earning data that comes out with the employment data.  The Year on Year increase in wages has been fairly well behaved, rising by 3.7% last month.  This month the expectations are for the wages to decline to 3.6% annual rate, which would be the lowest level since March of 2006.