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How will the NFP look?
As we have seen, there isn't really a very good correlation between the NFP and the private employment reports that are published, including the employment components of the CHI PMI, ISM or services ISM. There's a very good reason why-the data in those reports is collected very differently then the way the BLS collects the data. The BLS only counts jobs that exist during the 7 day period beginning on the 12th for any given month. It then takes those numbers and applies a set of complex formula's in order to make the estimate. If a company hires workers at other times, those jobs are counted in the revisions. For example, if a company hires workers between the 1st and the 10th of December, those jobs will not be reflected in the December NFP, they'll be announced as a revision to December NFP with the January report. Likewise for workers hired in December after the week of the 12th. If it happens to turn out that hirings did not occur during the week of the 12th, then for BLS purposes no new jobs will be counted as being created by that company for that particular month in the headline NFP. All other reports simply collect end of the month data. If the employment component of the ISM shows a net increase for December as compared to November, their employment index will register an increase, but only those jobs created DURING the week of the 12th will be counted in the headline number of the NFP. As we have also seen, the market really trades off the revised number and we now can see a very good reason for this. We can also see why no estimates are made for possible revisions; it's just too difficult. What does this tell you as a trader? Don't listen to any reports or rumors regarding the NFP and don't take a position prior to the report, unless you're just looking for a gambling thrill. No one really knows how those numbers will look. If you're wondering how I came to know this, the answer is simple: I called them and asked. The person in the employment section was very nice to give me about 15 minutes of their time.
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