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Massive US Nonfarm Payroll Miss in May Fuels Calls for More QE

By Tzu-Wen Chen
01 June 2012 13:14 GMT

THE TAKEAWAY: [U.S. NFP hiring in May rises less than expected, third month of slowdown; jobless rate rises slightly] > [Huge jobs data miss prompts further QE] > [USDJPY mixed]

Job growth in the U.S. took a huge hit in May, as the rise in nonfarm payrolls (NFP) plummeted for the third straight month. The U.S. Bureau of Labor Statistics (BLS) reported today that employers added 69,000 workers to their payrolls in May, massively missing the median forecast of 150,000 according to a Bloomberg News survey. April NFP figure was revised downwards to 77,000 from its original print of 115,000. Private payrolls rose by 82,000 in May, down from 87,000 in April, while manufacturing added 12,000 jobs compared to 9000 a month ago.

Meanwhile, the unemployment rate rose to 8.2 percent in May, following a dip to 8.1% in April. This reflects a change in the labor force participation rate, as a rise in May by 0.2 percent to 63.8 percent offset a decline of the same amount in April.

The huge miss in job growth adds to growing concerns of a struggling U.S. labor market and economy. This will put further pressure on the Federal Reserve to boost the U.S. economy with a further round of quantitative easing.

USDJPY 1-minute Chart: June 1, 2012

Massive_US_Nonfarm_Payroll_Miss_in_May_Fuels_Calls_for_More_QE__body_Picture_2.png, Massive US Nonfarm Payroll Miss in May Fuels Calls for More QE

Chart created using Market Scope – Prepared by Tzu-Wen Chen

Following the data release, the greenback initially plummeted against the yen as the weak employment data adds to support for further stimulus by the Federal Reserve. However, we saw a surprise reversal and spike against the yen, which is likely to be due to intervention by the Bank of Japan to control appreciation of the yen. After falling as much as 11 pips, the U.S. dollar rallied higher against yen and at the time of this report, the USDJPY pair was trading at 78.25 yen.

--- Written by Tzu-Wen Chen DailyFX Research

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01 June 2012 13:14 GMT