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