NFP Falls Much Less Than Expected
NFP Falls Much Less Than Expected US May nonfarm payroll declined by 345K, the market had expected a decline of 520K. This marks the smallest decline in US nonfarm payrolls since September 2008 and was half the average monthly decline for the prior six months. The government also revised April and March nonfarm payrolls lower. The May unemployment rate rose to 9.4%, the trade had expected a rise of 9.2%. Steep job losses continued in manufacturing but moderated in construction and service producing industries. The US economy has shed over 6 Million jobs since the recession began in 2007. The better than expected nonfarm payroll decline is positive for risk appetite and may generate optimism that the worst for the US economy has passed. The USD initially traded lower after the report, pressured by reduced safe haven demand. The USD firmed as the trade digests impact of better than expected nfp and worse than expected headline unemployment for May. The worse than expected rise in the May unemployment rate suggests that the US economy is still shedding jobs at a rapid pace. The US unemployment rate is expected to remain elevated for some time even as the economy bottoms. The US may shed another 2 Million jobs before the end of 2009 and the unemployment rate is expected not to peak before it reaches 10%. Today’s report fits into the current recovery theme and is a mild negative for the USD. The report also suggests that jobs growth is not likely to return to the US economy anytime soon. This means that the anticipated US economic rebound in the second half of 2009 will be weak.
By Michael J. Malpede
Easy Forex
Michael J. Malpede is Chief Market Analyst with Easy-Forex® and has previously been featured on Bloomberg TV, Bloomberg radio, Reuters, MarketWatch, Wall Street Journal, Chicago Tribune, Chicago Sun Times, Toronto Star and Nikkei press. In analyzing the markets, he draws from 29 years of Foreign Exchange Research as a Foreign Exchange Analyst.
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