Mecklai Graph: Will NFP impress Fed?

NFP being one of the most vital data points for employment change in the U.S also gives direction for consumer spending as discretionary incomes in the hands of employees is of substance here. The ADP non-farm employment change is the 2 day leading indicator for the government released data. Accordingly, the data released yesterday shows an increase in employment to the tune of 163K, leading to a positive expectation from the government version.

Though the consumer spending flagged, job growth slackened and manufacturing cooled Fed Chairman Ben S. Bernanke refrained from surprising the market in the FOMC meet, but maintained its late-2014 language. In lieu of the two villains of the piece for the Fed viz. the fiscal cliff situation which deals with spending cuts of close to $600 billion and tax increases, and the Europe debt crisis it said7 it will pump fresh stimulus if necessary into the weakening economic expansion to boost growth and reduce an unemployment rate that’s been stuck at 8 percent or higher for more than three years.

The NFP is will be a key piece of data as the FOMC will assess unemployment reports for July and August, before its next meeting Sept. 12-13. The below graph denotes that the pace of hiring has been slowed in the past 4 months signifying that the US economy has decelerated and is in need of new monetary stimulus. With this months data tending towards positive territory a thorough discussion on the subject would entail among the policy makers in the U.S.

The below graph shows the monthly Non-Farm Employment Change for a period of seven months.

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