5 things to expect from US jobs report data: numbers, warnings, and reactions

Key Takeaways

Goldman Sachs warns the upcoming BLS job report might exaggerate economic downturns.
The report’s revision could show a monthly job growth decrease, potentially misleading stakeholders.

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The upcoming US jobs data may present a somewhat misleading picture, analysts from several financial firms warn. Financial markets, including crypto, brace for potential volatility as the US Bureau of Labor Statistics (BLS) prepares to release its preliminary estimate Wednesday, with data based on benchmark revisions to monthly nonfarm payrolls.

With this potentially wild Wednesday in the markets coming, we’ve prepared some notes on what’s about to happen. Here’s a breakdown of five key things crypto investors should know about this data release from the BLS and how it might impact crypto markets.

1. Potential downward revision of job growth

The BLS report, covering April 2023 to March 2024, is expected to paint a grimmer picture of the US economy than previously thought, with slowed job growth numbers looming. However, leading investment banks caution that the data could be misleading and overstate economic weakness.

2. Misleading data warnings

Goldman Sachs cautions that the downward revision could be misleading. The bank’s Economics Research team stated:

“While next week’s revision could revise the pace down to 165-200k/month, we believe that a portion of that revision will be erroneous and that the ‘true’ pace of employment growth during that period was probably closer to 200-240k/month.”

3. Potential market reaction

The revelation of weaker job growth could reignite recession fears, potentially triggering a shift away from risk assets, including crypto. This reaction would mirror market behavior observed following the July jobs report released earlier this month.

4. Significant reduction in payroll numbers

Morgan Stanley, a multinational investment bank and financial services firm, projects a substantial downward revision of payrolls, estimating a reduction of 600,000 jobs from current reports. This implies a trimming of approximately 50,000 jobs per month over the 12-month period through March.

5. Federal Reserve minutes release

Following the BLS data release, market attention will shift to the minutes of the Federal Reserve’s July meeting, scheduled for release at 18:00 UTC. Morgan Stanley analysts noted:

“We will look for why the FOMC wanted to wait until September to consider easing monetary policy and if a 50bp [rate] cut was discussed.”

The combination of potentially misleading economic data and insights into the Federal Reserve’s monetary policy deliberations could create a complex trading environment for crypto markets. While initial reactions may lean bearish if the jobs data appears weak, savvy market participants may look beyond headline numbers to assess the true state of the US economy.

How the crypto market reacts to macroeconomic data and policy decisions has become increasingly nuanced. Traders and investors in the space will need to carefully weigh the implications of Wednesday’s releases against broader economic trends and potential policy shifts.

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