Non Farm Payrolls Positive Data in January 2023
January 2023 NFP data spiked to 517k versus 185k expected, and unemployment rate also fell to 3.4%. This figure was well beyond expectations, with an estimate standing at 185k and suggests a strong jobs recovery.
The US non farm payrolls (NFP) data, usually released on the first Friday of each month, measures employment in the country. It excludes farm workers and a small number of private household employees.
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NFP beyond expectations in January 2023
This data shows the strength of the US economy and its labor market. It also helps investors understand the impact of inflation on the Fed’s policy decisions.
Traders should watch out for this NFP data as it can have a significant impact on the forex market. This is especially true for traders that trade the EUR/USD currency pair.
While this is good news for traders the NFP report can have a large impact on currencies, bonds, equities, and commodities. This is why many traders choose to avoid trading around the release of this data. Instead, they wait to see how the market reacts after the announcement.
Unemployment is also down
In a reversal from the recent trend, the economy added 517,000 non farm payrolls in January 2023, far above economist expectations. It was the biggest gain in six months and a much stronger gain than December’s 223K addition.
Unemployment also fell to 3.4%, the lowest since 1969 and below economist expectations.
Job growth was broad-based, with most industries adding workers last month. Hotels and restaurants (128,000) led the way, but retail and construction companies also benefited.
Economists say the strong gains in the service sector, especially leisure and hospitality, could raise worries about wage pressures if they aren’t balanced. They suggest the Fed should watch for 100K or more in job creation as it considers the supply-demand balance.
What are non farm payrolls
Non farm payrolls are the number of paid workers in the United States who are employed by businesses. They include all employees except proprietors, private household employees, farm employees and employees of nonprofit organizations who provide assistance to individuals.
These data are released monthly, usually on the first Friday of the month. They are an important indicator of economic growth and inflation. They also indicate where interest rates may go in the near future.
Traders will typically be watching the data closely as they can have significant impact on the forex market, especially the dollar. When an NFP report comes out positive, the dollar will usually strengthen against other currencies.
When the report shows a decrease in jobs, however, it will be viewed negatively and this is usually taken as a sign of economic slowdown. This can lead to the US dollar weakening against other currencies, such as the Euro, which would make EU traders have to spend more money to buy Euro.
In addition to the NFP, other important economic data is released on the first Friday of every month, including the unemployment rate. All of these factors are important for forex traders, and they can be monitored through Forex Calendar.