Don’t Be Surprised if January’s U.S. Jobs Report has a Big Miss

The strongest part of US economy is the labor market and it will likely deliver its 100th month of gains at the same time having the longest U.S. government shutdown weigh on economy.  Economist are expecting the January nonfarm payroll (NFP) reading at 165,000, with the range of estimates varying from as low as -40,000 to as high as +230,000 jobs.  I would not be surprised if we saw a soft print come in around 95,000, mainly due to seasonality factors, effects from the shutdown, and as the positive impact from the Trump tax cuts evaporate.  The U.S. employment report along with wages will be published on Friday, February 1st at 8:30 am ET.  Weaker data prints might initially cement an already dovish Fed and that could spell further weakness for the greenback

  • US jobs to rise by 165,000
  • US wages to gain 0.3%
  • US Unemployment to remain steady at 3.9%

Shutdown Effect

The shutdown’s effect on contractors will also weigh on January data, as wages and projects which may have been delayed or lost could weigh on hiring.  The shutdown has also delayed a wrath of economic data that will make economists’ forecast models not see all the normal leading indicators for this nonfarm employment report.  The ISM Manufacturing reading along with the employment component will be released 90-minutes after the NFP release and the Markit Services PMI reading, which includes the composite and services sector employment will print on Tuesday.


Looking at the last 10 January US employment reports, we saw five big misses, one small miss, four strong beats, but the last two strong January beats in 2017 and 2018 followed big misses in the prior month.  Tomorrow’s release is coming off a robust 312,000 print in December that beat even the most optimistic forecast.

Don’t put too much weight on ADP

There is no denying the strength of the private sector, but traders need to be reminded that a strong ADP does not necessarily point to a strong beat with the non-farm payroll headline number.  On Wednesday, the ADP non-farm employment change came in better than expected with 213,000 jobs created, much higher than the expected rise of 181,000, and well below the blockbuster print in December, which was revised down from 271,000 to 263,000.

Since the start of 2018, we have seen ADP deliver strong beats on 8 occasions while the non-farm payroll report delivered 4 beats and 4 misses.

Gold’s reaction to NFP could be very transparent

Gold has been on a tear this month, as safe haven flows came from concerns the government shutdown will have a significant effect on the economy, trade war uncertainty, weakening data from Europe and China, with the biggest contributor being the Fed’s message that rates are not going anywhere anytime soon and that they are ready to adjust balance sheet normalization. This week, precious metal finally broke out above the $1,300 level and could see the next resistance level come from the $1,370 region, which is just above the 2018 high.  If we see the employment report come in softer than expected, the yellow metal could see the bullish move attempt to make fresh highs for the week.

Market events to watch this week:

Friday, February 1st

8:30am USD Non-Farm Employment Change
8:30am USD Average Hourly Earnings m/m
8:30am USD Wages m/m
9:30am CAD Manufacturing PMI
9:45am USD Markit US Manufacturing PMI
10:00am USD University of Michigan Sentiment
10:00am USD Construction Spending
10:00am USD ISM Manufacturing
10:00am USD Wholesale Inventories m/m

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya