NFP Preview and Forecast: Oct 2017

NFP last in September at 156 is forecasted at 98 for October and this forecast derives from the 9 year NFP monthly average. NFP in August hit the 5 year average at 202 and fell significantly to 156. The number to beat for August was 206 then 206 would’ve been above every average from 1 to 78 years. Above 206 appeared as a bright future for continued job gains over coming months. What is 78 years is the February 1939 start of NFP.

The 98 forecast figure is to low in terms of the averages. From previous 156, it also falls outside the crucial 50,000 range average as 50,000 is the traditional range average since 1939 inception. The downside should be viewed from 106, 156 minus 50,000. Further, downside targets to NFP are located from 118.46 to the high side at 137.07. Below 118.46 then next comes 103.50 and 81.20 at the 9 year monthly average. Factor average targets to 103.50 and 81.20 offers 92’s and not the 98 forecasted. Its not uncommon to see the BLS wrong in forecasts as they render the same mistake as the crowd by forecasting NFP in short terms.

Further to 50,000 is its the breakout point to market prices. The topside must see 148 or above to see for example EUR/USD experience a 100 pip day but this break point factors against any market price. A break of 50,000 NFP means a range break in market prices. Within 50,000 then prices range trade as the strategy becomes buy low and sell high.

The figure 156 and 98 forecasted is below every average and every median within every average from 1 to 78 years. The bright future from monthly averages fails the promising job gain views for this month. NFP averages are volatile month to month so what appears as dreadful this month may appear again bright next month. Here;s examples from August writings.

The 1 year monthly average in May 2015 was 208.83, climbed to 243.25 in September 2015 then dropped to 186.50. The 5 year average in May 2015 was negative 498.88, jumped to 199.10 in September 2015 and now sits at 206.38. The 2 year average was 191.37 in May 2015, bolted to 233.87 in September 2015 then dropped to current 194.25. The 10 year average in May 2015 was 66.19 and now resides at 69.34. The 25 year average in September 2015 was 108.50 and is now located at 125.35.

The highest average and number to beat is 232.64 at the 9 year average. Again, the 9 year average plays the most crucial role for this month. Normally forecast are seen fron monthly averages 1 to 6 years. Massive resistance points exist above starting from 174.75, 176.50, 187.50, 189.50, 190, 192 and 197. As a tough slog exits for NFP to travel higher, I view this month as within the 50,000 range and market prices range trade.

The point of note is 174.75 is the first resistance point and a long way from 98. My forecast from the downside is 118.46 to 122.43. Above I’m looking at just under 148. And overall, I don’t see the range break trade.

A primer on the 50,000 and NFP history.

The NFP driver and now more than ever in the 78 year history of NFP’s is the time to focus on the 50,000 because 50,000 is the currency market price break point. The 50,000 is seen more times in the last 3, 10 and 20 year monthly averages than any other time in NFP’s history.

The 50,000 was seen 85 times in the last 20 years, 71 times in the prior 20 years, 68 times in the prior 20 years and 37 times from February 1939 to 1952. Overall, the 50,000 was seen 261 times in 942 months or 1/4 over the life of NFP. .

Was the 2008 and 2009 period the worst NFP’s seen since the Great Depression. No because the release began in February 1939 and long past the Great Recession.

220 months or 18.3 years from a total of 941 months or 78.4 years were negative. This means 721 months or 60 years were positive job growth numbers. 2008 to 2009 or 23 of 24 months were negative.

The next negative period was the 2001 terrorist attacks on the World Trade Center. Then the 1980 – 1981 recession followed by the Kennedy Assassination in 1960 to 1961.

Further negative years include 1974 to 1975 and 1956 to 1958. Next comes 1952 to 1954 and 1944 to 1949. This period 1944 to 1949 was WW 2 as well as Bretton Woods.

Charted, 1944 to 1949 was the worst period in NFP’s 78 year history due to a speculation of a smaller population and overall smaller number of persons in the workforce. Read WW2 history to realize, the US was ill prepared to fight a war. The US didn’t even have guns to match the Germans.

Brian Twomey