Fed Policymakers and Investors Await the NFP Report

July 05, 2023 12:21

June’s Nonfarm Payrolls report, due to be released on Friday, is one of the most important data releases this week. The NFP figures will show how tight the labour market is, while it should be noted that, especially in the last few months, they tended to surpass expectations. The NFP report is scrutinised by analysts as it is taken into consideration by the Federal Reserve (Fed) when planning its monetary policy.

While waiting for the NFP data, analysts will have the opportunity to review the Federal Open Market Committee (FOMC) minutes, looking for clues about the Fed’s next moves.

In Europe, a report published by S&P Global and the Hamburg Commercial Bank (HCOB) showed that the euro bloc’s Service PMI came in at 52.0 in June, a bit lower than the preliminary figure of 52.4 and hitting a 5-month low. The same report showed that the bloc’s revised Composite PMI came in at 49.9.

US Nonfarm Payrolls Figures Drop in June?

The US Bureau of Labour Statistics (BLS) will publish its June Nonfarm Payrolls report on Friday. Economists forecast a drop in the NFP figures to 223,000 from 339,000 recorded in May. Friday’s data release, along with the next inflation report, will weigh on the Fed's decision on whether to hike interest rates at the next meeting or not.

Wells Fargo analysts suggest that the figure could reach 245,000. “We expect nonfarm payroll growth to moderate in June. Demand for workers continues to subside, with initial jobless claims moving up between survey weeks and the four-week average up nearly 20% over the past year. Meanwhile, job postings in June continued to slide,” they note in their report adding that “cooling in the jobs market remains incremental rather than abrupt.”

Eurozone Retail Sales in May

Eurostat will release its eurozone retail sales data for May on Thursday. Market analysts suggest that retail sales fell by 2.7% on a year-to-year basis. If the forecast was to be confirmed, this would be the second month in a row that retail sales have dropped in the euro bloc. The eurozone is tormented by high inflation figures and rising interest rates that have elevated the cost of living. As a result, consumers are forced to adjust their budget spending.

Chinese Services Activity Slows Down in June

The Caixin/S&P Global services purchasing managers' index (PMI) eased to 53.9 in June from 57.1 in May, the lowest reading recorded in the last five months. A figure above the 50-point mark shows expansion, while a figure below 50 reflects contraction in activity.

Economists at Caixin Insight Group said that "employment contracted, deflationary pressure mounted, and optimism waned in the manufacturing sector. Meanwhile, the services sector continued a post-COVID rebound, but the recovery was losing steam."

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.