By FXEmpire.com

Investors worldwide will be turn in, log on or do whatever they do tomorrow, waiting for the news on the NFP.

There are two very important parts of the release data, first will be the number of jobs created. This usually causes an instantaneous reaction, but a seasoned trader, waits just a minute or two more to hear the details of the revisions and also the actual unemployment figure.

Before we get ahead of ourselves, lets look at the information we have already. On Wednesday the ADP payroll report was issued showing that fewer then 120k new jobs were created, well under forecast. The ADP report is only a leading indicator, which gives the market some clue as to what to expect on Friday from the official government report.

Lately, the ADP report was extremely out of sync with the actual.

The other piece of data that we just received today, was the US unemployment figures, this is the number of total claimants filing for unemployment continuing unemployment benefits. Today’s, report showed an unexpected drop in the total unemployed.

So what we have is:

A) The US Dept of Labor said the number of persons filing for initial jobless benefits in the week ending April 28 fell by 27,000 to a seasonally adjusted 365,000, beating expectations for a decline to 380,000. The previous week’s figure was revised up to 392,000 from 388,000.

B) Private-sector employment increased 119,000 in April, the lowest result since September, led by the service-providing sector and small and medium businesses, according to ADP. The April gain is down from average monthly employment increases of about 200,000 in the first quarter of 2012, according to ADP.

So what are markets expecting?

Friday’s NFP Employment Change release is forecasted at 185K. The Unemployment Rate is expected to remain at 8.2%.

How do you use the data that we have to make an educated guess at the results?

With a drop in the unemployment claims, the Unemployment rate should remain steady. In April the rate fell from 8.3% to the current 8.2%. Without a huge number of new jobs, it will be unlikely that that rate will decline. With the drop in new claimants, this also supports the rate staying on point. There has not been a significant or overall steady drop in the number of claimants since last month to significantly lower the rate. The money would be on the unemployment rate holding.

Job creation is of ultimate importance to the recovery of the US economy. For some reason, businesses just do not seem to be hiring. They may have stopped reducing their work forces but they have not increased them significantly.

One of the major hurdles has been the high cost of energy, which is eating into company overheads either directly or indirectly, but when one cost it up, others must come down and stay down, so hiring new positions just isn’t on the drawing board.

In April the NFP shocked investors by creating way more jobs than forecast, more than markets could believe, many thought it was fluke or an accounting error. In truth it might have just been a matter of timing, and in April the numbers were too high and in May they will be lower, but the average will still be good, unfortunately the markets do not view it that way, and this month we need to see a figure exceeding 189k to meet forecast. With the ADP report coming is so low, slightly under 120k we have a quandary.

It is my guestimate that we will see solid job creation, not a disaster, but slightly under the 189k forecast, but close enough to be considers market neutral.

What do you think ?

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Originally posted here