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A look ahead to Non Farm Payrolls (1330 GMT)

01/02/2019

All eyes will be focused on the monthly guessing game that is the NFP figure. Usually published on the first Friday of the month, (but rarely when the first of the month actually falls on a Friday, such as today),  today’s figures will be doubly suspect. Firstly, these have to be compiled in a much smaller time frame than is usual, and therefore potentially subject to a greater margin of revision next month, and secondly, that they have the potential to be distorted by the US Government shutdown. Of course, this won’t include actual Government employees who have simply been furloughed – and classified as "unemployed on temporary layoff” -  but it is going to affect those individuals who are sub-contracted to undertake Government work and are paid by invoice, not salary.  It is worth remembering that the December figure of 312k was surprisingly strong and January may well prove to be the antidote to December, with estimates generally pitching in the 150k-170k level. As noted in Monday’s calendar item, and with February being the years only 28 day month, March 1st also falls on a Friday, but the February NFP release will be delayed for a week, which again suggests that too much reliance should not be placed on the accuracy of today’s headline figures in assessing medium-term investment strategy. Wage growth will also be in focus with an expectation of +0.25%.

On a side note, this weekend sees the New England Patriots once again competing in the Super Bowl, this time against the LA Rams. After last year’s unexpected loss to Philadelphia, the US stock markets reacted with a sharp sell-off. These two events may or may not have been connected but investors will probably be hoping for yet another New England victory just in case…

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