What is the distribution of forecasts for the US NFP?
The ranges of estimates are
important in terms of market reaction because when the actual data deviates from the
expectations, it creates a surprise effect. Another
important input in market’s reaction is the distribution of forecasts.
In fact, although we can have a range of
estimates, most forecasts might be clustered on the upper bound of the
range, so even if the data comes out inside the range of estimates but
on the lower bound of the range, it can still create a surprise effect.
Non-Farm Payrolls
- 75K-190K range of estimates
- 110K-150K range most clustered
- 130K consensus
Unemployment Rate
- 4.3% (14%)
- 4.2% (83%) – consensus
- 4.1% (3%)
Average Hourly Earnings Y/Y
- 3.8% (10%)
- 3.7% (45%) – consensus
- 3.6% (45%)
Average Hourly Earnings M/M
- 0.4% (2%)
- 0.3% (71%) – consensus
- 0.2% (27%)
Average Weekly Hours
- 34.4 (3%)
- 34.3 (76%) – consensus
- 34.2 (21%)
You can notice that the forecasts are leaning towards a softish report. There are more forecasts for higher unemployment rate and lower average hourly earnings figures. Therefore, if the data comes out a bit above consensus, it would have a bigger surprise effect than if the data were to come below consensus.
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