What is the distribution of forecasts for the US NFP?

Why it’s important?

In the Asian session, Eamonn published the range of estimates for today’s US NFP report. These ranges are
important in terms of market reaction because when the actual data deviates from the
expectations, it creates a surprise effect. Another
important input in market’s reaction is the distribution of forecasts.

In fact, although we can have a range of
estimates, most forecasts might be clustered on the upper bound of the
range, so even if the data comes out inside the range of estimates but
on the lower bound of the range, it can still create a surprise effect.

Distribution of forecasts

Non-Farm Payrolls

• 70K-220K range of estimates
• 135K-160K range most clustered

Unemployment Rate

• 4.3% (33%)
• 4.2% (63%)
• 4.1% (4%)

Average Hourly Earnings Y/Y

• 3.9% (3%)
• 3.8% (67%)
• 3.7% (30%)

Average Hourly Earnings M/M

• 0.4% (4%)
• 0.3% (71%)
• 0.2% (25%)

Average Weekly Hours

• 34.8 (3%)
• 34.3 (93%)
• 34.2 (4%)

We can see that the bias is skewed to the upside for the Unemployment Rate and following the latest US Consumer Confidence report a tick higher to 4.3% wouldn’t be surprising. It will be interesting to see whether it’s again just because of more labour supply or increased layoffs.

This article was written by Giuseppe Dellamotta at www.forexlive.com.