USA

January 2014 employment report alias NFP

Tomorrow brings the January 2014 employment report – NFP – .  The usual caveats apply:

  • The monthly change in payrolls is a net number and represents only a fraction of the churn in the labor market.
  • The employment data is heavily revised.  The preliminary number can greatly understate or overstate actual labor market behavior.
  • Nasty weather might also have impacted the numbers.  Robin Harding at the Financial Times identifies other factors – expiration of unemployment benefits and annual revisions – that can also scramble the final numbers in the report.
  • Forecasting the change in payrolls is thus something of a fool’s game.  A game we all play nonetheless.

US NFP Employment measures is the change in number of employed people during the previous month, excluding the farming industry.

A rising trend has a positive effect on the nation´s currency.

Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.

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