Trading the NonFarm Payroll

The Bureau of Labor Statistics announced today on the non-farm payroll report that jobs rose by about 120,000 for the month of March. This is good news, but not good enough. It was expected that over 200,000 jobs would have been added over this timeframe. So instead, this is actually a sharp decline in the rate that jobs had been being added to our economy. Although this had the joblessness rate drop from 8.3 to 8.2 percent of Americans, much better progress was expected. This is the lowest that the joblessness rate has been since January 2009, still, so things are not looking too bad. In February, jobs grew by about 240,000—double of what March apparently brought us.

How will this affect the market? For starters, it’s a good thing that the stock market is closed for Good Friday because this would undoubtedly be detrimental to stock prices. March marked the 15th straight month that jobs were added to our economy, but the rate of growth is beginning to slow down, which is not good news for still choppy financial markets. This is especially true of the U.S. dollar. In light of a weak Euro, the dollar has been gaining value steadily, but today’s non-farm payroll report encouraged the Euro to rise by about a quarter of a percentage point. The dollar also fell against the British pound by about 0.35 percent.

The incoming non-farm payroll data was far less than was expected, especially after all of the encouraging news that our economy has recently received. Layoff reports say that this practice is down, and there are 21 percent more job openings than there was a year ago for a total of over 3.4 million. This payroll report trumps all of these pieces of news, though, thanks to its weighted importance upon U.S. financial markets. This report packs quite a bit of punch and the markets will surely respond in kind when they reopen next week. The biggest weakness in the U.S. economy is the retail sector, where 34,000 jobs were lost last month. And while average hourly wages increased, the amount of hours decreased even more, making the average weekly pay decrease overall. Other key areas, like manufacturing, business services, healthcare, and restaurants all saw an increase in the amount of jobs that they offer.

Federal treasuries rose in value, however, on this news. Bonds moved sharply up in price during the limited trading day, which is good news for long term investors.

This data will surely cause stocks to fall in value at the beginning of the week, but by the end of the week, other more prevalent factors will shape trading. The deficit and consumer sentiment will all be much more influential by the end of next week.

Keep an eye out for our latest review of Trade Vantage and our videos of the product.

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