What to expect from January's US nonfarm payrolls report
The US jobs report for January 2025 arrives on February 7, with markets anticipating 165,000 new positions. Here's what traders should watch.
Key numbers to watch
Economists expect the US economy to have added around 165,000 jobs in January, marking a significant slowdown from December's robust 256,000 gain. This moderation would align with broader economic trends.
The unemployment rate is forecast to hold steady at 4.1%, suggesting continued resilience in the labour market despite recent economic headwinds.
Wage growth remains a crucial focus for forex trading participants, with average hourly earnings expected to maintain a 4.1% year-over-year (YoY) increase.
The participation rate will also draw attention, as it provides insight into whether workers are being drawn back into the labour force.
Impact of annual revisions
January's report carries additional significance due to the inclusion of annual benchmark revisions that could substantially alter previous employment figures.
The Bureau of Labor Statistics will update its seasonal adjustment factors and birth-death model, potentially leading to significant revisions in historical data.
These adjustments could provide a clearer picture of labour market trends. Traders should be prepared for potential volatility as markets digest both new data and historical revisions.
Market implications of the report
The jobs report typically triggers significant moves across various markets, particularly if the figures are significantly different to expectations.
A stronger-than-expected report could boost the US dollar and potentially pressure equity markets, as it might reduce expectations for Federal Reserve (Fed) rate cuts.
Conversely, weaker data could fuel expectations of earlier monetary easing, potentially supporting stock indices while weighing on the dollar.
Bond markets often see substantial volatility around the release, with yields sensitive to both headline numbers and wage growth data.
Federal Reserve implications
The Fed will closely analyse this report as it weighs the timing of potential rate cuts in 2025.
Robust job growth and persistent wage pressures could reinforce the Fed's patient approach, potentially delaying the first rate cut.
Signs of labour market softening, particularly in wage growth, might strengthen the case for earlier monetary easing.
How to trade the NFP report
Before trading the nonfarm payrolls (NFP) release, ensure you thoroughly understand its potential market impact and have a clear strategy in place.
Consider whether you want to trade or invest based on the data. You can open a CFD account to access various markets.
Search for relevant markets to trade, keeping in mind that forex pairs, indices, and gold often see significant moves around NFP releases.
Remember to implement appropriate risk management measures, as economic data releases can trigger substantial market volatility.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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