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November Non-Farm Payroll - Consensus Estimate 100,000-105,000 jobs.
Release time: December 8, 2006 - 8:30 AM EST

The monthly Non-Farm Payroll report is by far the largest data report in the financial market universe. The Non-Farm Payroll report can make currency prices move big and fast.

Nonfarm payroll employment rose a moderate 92,000 in October while wage inflation came in at a strong 0.4%. The unemployment rate, reflecting a tight labor market, fell a 4.4% from a 4.6% in September. While a moderate payroll jobs increase is needed to support a soft landing, the markets will be paying attention to signs of whether the labor market is remaining tight or showing any signs of softening. Even a 115k gain is consistent with the weakening economy. Fed Chairman Bernancke and other Fed officials have emphasized that tight labor markets are a concern. Also, with recent weakness in manufacturing as seen in durables orders and various private surveys, markets will be paying attention to factory jobs and factory hours worked. In October, manufacturing jobs fell by 39,000 while the aggregate index for hours worked in manufacturing was flat. Manufacturing is expected to show a fifth consecutive decline as demand dries up.

Key factors thought to influence this months Non-Farm Payroll report include:

Non-Farm payrolls expectations are ranging from 100k - 115k. The 3 month average is 157k.

Manufacturing is expected to show a fifth consecutive decline.

Construction is expected to show another decline as residential effects become more clear.

A 120k gain in private service sector jobs holds in recent range.

The heart of the gain is professional, health and accommodations.

Retail is expected to show 7th decline in the last 8 months. Seasonality plays a crucial role for the size.

An unchanged 4.4% unemployment rate is expected.

The Labor Department reported, in the week ending November 25, the advance figures for seasonally adjusted initial claims was 357,000, a increase of 34,000 from the previous week's revised figure of 323,000. The 4-week moving average was 325,000, an increase of 7,250 from the previous week's revised average of 317,750.

About the Non Farm Payroll report

Of all the world monthly economic reports that can move the currency market, this is it! The monthly US Non Farm Payroll report. This report is the most highly anticipated report each month that can have the most dramatic impact on the markets.

The employment data gives the most comprehensive report on how many people are looking for jobs, how many have them, what they are getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the US economy.

The employment numbers are used as another tools by the Federal Reserve in shaping their interest rate policies. The health of the US economy and US interest rates translates to the strength or weakness of the US dollar.

Risk with News Trading.

As with all major economic releases there could be significant price volatility with this announcement. Currency spreads will typically widen just before the release and will remain wide for a few minutes after. If the announcement is a shock to the consensus estimate, the price of the currency pair could gap significantly. For example, the price on the EURUSD trading at 1.2820 - 1.2822 just before release could gap up 60 pips to 1.2880 - 1.2882, without any available prices available between the price of 1.2820 and 1.2882. A Buy Stop placed before the announcement at 1.2830 would turn into a Market Order and would be filled at the prevailing price 1.2882. The same would be true with a Sell Stop.

Approximately four years ago we saw a gap of approximately 200 pips on the GBPUSD on a Non-Farm Payroll announcement. While this is an extreme example, this is what is possible with trading during economic announcements. Basically, plan on the spreads widening and if you are trading with a Buy or a Sell Stop entry order, do not anticipate being filled at your entry price. You will be filled at the prevailing market price after the release, and this market price could be significantly different from your desired price of your entry order.

Click the Non-Farm Payroll Report to learn more about profiting from this monthly economic data report.

Good day and good trading.

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