Risk Events: NFP, Unemployment, and PMI

On Friday, August 1st, 2014 we have a very busy day with various news announcements coming in from leading world economies. Included in the announcements we have the most followed figure by the markets, Non Farm Payroll. A summary of the announcements and historical charts are provided below.

AnnouncementTime (GMT)ForecastPrevious ActualPrevious Forecast
Euro Area Manufacturing PMI8:00 AM51.951.951.7
UK Manufacturing PMI8:30 AM57.257.556.8
Non Farm Payroll12:30 PM233K288K212K
US Unemployment Rate12:30 PM6.1%6.1%6.3%
ISM Manufacturing PMI2:00 PM56.055.355.8

Euro Area PMI

UK PMI

US PMI

NFP

US Unemployment Rate

NFP

The big number will arrive as the North American market will start its day which would have already seen Euro area and UK PMI numbers. The focus will be on this number as it has been for some time, though many investors would have already acted on their speculations when ADP came out earlier this week. ADP Employment Change was overestimated as the figure came in at 218K from a forecasted 230K. This indicated that NFP may fall short of its own forecast of 233K though these figures have diverged before.

Manufacturing PMI

Figures regarding the Manufacturing Purchasing Managers Index will be coming from three world leading economies on the same day. Markets will have time to react to Euro area and UK PMI as they will be released before NFP but US PMI may be drowned out as it comes in after, a lot of it depends on whether they are conflicting or not (i.e. a good NFP figure will overshadow an overestimated PMI and an unfavourable NFP will overshadow a favourable PMI). In terms of their individual forecasts, we see UK PMI jumping up and remaining stable just above 57.0 which appears to be the strongest performing figures with US PMI following closely behind with strong numbers above 55. Finally there’s Euro area PMI which has been decreasing since the beginning of 2014 and sits just below 52 and is expected to do the same on Friday.

US Unemployment Rate

The final major announcement we should look out for is the unemployment rate coming in from the US. The rate is announced along with NFP as they both essentially tell is the same thing theoretically (that is, the number of people employed during the month versus the percentage of the workforce that is unemployed). The number is expected to hold for Friday which means that with a growing work force, approximately 93.9% of the increase is expected to be employed (these are not necessarily new entrants). The last time this figure was this low was in 2008.