Non-Farm Payroll; United States’ Economy Crawling Back to Normalcy from the Scars of Omicron Virus

The non-farm payroll (NFP) report is a key economic indicator for the United States. It is intended to represent the total number of paid workers in the U.S excluding farm employees, government employees, private household employees, and employees of non-profit making organizations.  The report is released every first Friday of a new month by the Bureau of Labor Statistics and is among the most market-moving data points for US Dollars, US equities, Treasuries, and Gold.

The strength of the economy last year stood in stark contrast to the collapse in activity in early 2020, but also speaks to the success of both the public and private sectors in quickly adapting to the unprecedented challenges created by the pandemic, that being said, potential headwinds still exist, as the global risks associated with COVID-19 pandemic persist.

With the unemployment rate currently at 3.9% and falling towards the pre-pandemic levels, the labor force participation rate has remained adamantly low compared to pre-pandemic points, as job openings are overflowing, and mentions of a lack of skilled labor are all too familiar, even though this kind of environment can be beneficial for wages, where a limited amount of workers leaves companies tussling over the remaining few talents.

However, the Omicron COVID-19 variant’s grip on the United States labor market is beginning to loosen, as the initial claims for unemployment insurance benefits dropped by 30,000 to 260,000, with more than 8.7 million American not working towards the end of December and early January because they had Covid-19 or were caring for someone who did, and another 5.3 million taking care of children who were home from school or daycare according to the estimate from the Census Bureau’s experimental Household Pulse Survey.

After a blistering pace of growth in 2021, economists expect a downshift for the economy this year as it grapples with labor and supply shortages and rampant inflation which currently stands at 7%, with the Federal Reserve suggesting it will combat rising prices with higher interest rate. Experts are forecasting that the United States economy will expand by a robust 3.5% even as the US Manufacturing PMI fell to 55% in January 2022 well below the forecast of 56.7%, pointing to the slowest growth in factory activity in 15 months.

Nevertheless, Traders should brace themselves up for a period of high volatility as an increase in Non-farm payroll will strengthen the United States dollar (USD) while a decrease will weaken the United States dollar (USD).

In response to the news release, trade the forex market with the following trading instruments on ACT Brokers platform, as the pairs are mostly affected by the data release; EURUSD, GBPUSD, XAUUSD, USDJPY, USDCAD, USDCHF, AUDUSD, NZDUSD, US30, US100, USOIL, US Oil, Facebook, Amazon, Tesla, etc.

Time Schedule for next NFP release:

Date: Friday 4th February 2022

 Time: 2:30 pm (GM + 1)

Francis Idowu is a Forex Dealer, Financial market analyst and writer, Data Analyst, and Financial Market Strategist with a background in Economics. He specializes in market strategies, Forex fundamental and technical analysis, and has spent over two years as a financial market contributor, observer, and trading coach. He is well known for his informative analysis of the global economy, fiat currency, commodities, Stocks, Indexes, Futures, and Options markets. He held a Bachelor's degree in Economics and Diploma in Structured Programming and Data processing.