Trading non-farm payrolls

The US jobs market remains resilient but faces uncertainties, with the non-farm payroll (NFP) report for May 2025 due tomorrow, 6 June, at 8:30 a.m. EDT. Here's a quick update based on recent data.

• Recent trends: the April 2025 NFP showed a gain of 177,000 jobs, above the Dow Jones estimate of 133,000 but below March's revised 185,000. The unemployment rate held steady at 4.2%, with the labour force participation rate slightly up at 62.6%. Private payrolls rose by 167,000, with health care and social assistance leading the gains.
• Wage growth: average hourly earnings in April rose 0.2% month on month, below the 0.3% forecast, with the annual rate at 3.8%, the lowest since July 2024. This suggests easing wage pressures.
• Economic context: the labour market is stable but showing signs of cooling. Economists estimate May payrolls at around 125,000, with the unemployment rate likely unchanged at 4.2%. Trade policy uncertainty, particularly tariffs, poses risks, with potential impacts not yet fully reflected in the data. Federal Reserve minutes highlight concerns about tariffs weakening the job market.
• Market expectations: the NFP report is a key focus for investors, as it influences Federal Reserve rate decisions. A strong report could delay anticipated rate cuts (markets expect a quarter-point cut in July), while a weaker report might reinforce expectations of monetary easing.

The consensus is 130,000 jobs added and 0.3% earnings growth. I've adjusted the table ranges to reflect deviations from these expectations:

• Jobs added. Below 100K: significantly below expectations (130K – 30K = 100K, a reasonable threshold for "weak"). 100K–160K: around expectations (130K ± 30K, the "neutral" range). Above 160K: significantly above expectations (130K + 30K = 160K, a reasonable threshold for "strong").
• Earnings growth. Below 0.2%: below expectations (0.3% – 0.1% = 0.2%). 0.2%–0.4%: around expectations (0.3% ± 0.1%, the "neutral" range). Above 0.4%: above expectations (0.3% + 0.1% = 0.4%).

Outlook: tomorrow's report will show whether the labour market continues to hold firm or shows early signs of tariff-related strain. A result near or above the 125,000 estimate would signal ongoing resilience, while a significant miss could heighten concerns about an economic slowdown. Stay tuned for the release: it will likely move the USD, stocks and bond yields.

Non-farm payroll figures give market participants a sense of how healthy the job market is. It's a key metric used by the Fed, and the results can cause a rapid repricing of economic expectations. A temporary withdrawal of liquidity can cause extreme volatility in either direction, but after the first 5 minutes, liquidity tends to settle down.

• 10 minutes before the NFP release, mark the lows and highs of the most relevant local levels on your charts.
• Where are we on the larger time frame? Is there potential for a larger move, and where are larger stops potentially placed? These are all questions you should be asking.
• Identify where you want to engage and where you want to be involved. Define your risk and targets in advance. Ideally, use OCO orders, as it's often too difficult to trade physically. The fewer decisions you make on the fly, the better.
• What is liquidity like? Keep asking this question! Is the environment tradable?

• What was the number, or numbers? How is the market reacting? Does it make sense relative to the release, or is it an overreaction?
• Is the market doing a good job? What is the health of the auction? These are the same questions I normally ask myself, only sped up 10 times.
• If you miss the first move, pull-backs to the SOC (scene of the crime) can offer the best risk-reward. Be careful to fade slower, more deliberate price action back to the SOC: understanding price action is important. Footprint charts are your best friend, unless you can read the ticker, and that trumps all other tools.
• Look for a rejection reversal back through the SOC as the initial move is reversed: a countermove using the data liquidity. Does it complement an HTF trend?
• Where are your HTF targets?

Trading NFP creates high volatility and opportunity, and many of those new to trading fail to follow a simple structure in how they interact with the market. I've outlined some of my processes into and during NFP. It's not a comprehensive list, but it offers some good guidelines. Once again, this process is my own and you need to come up with your own, but the key to success is being consistent and recognising that loss is a normal part of day trading.

I hope you find this article interesting. If you'd like to learn more about trading with market profile and footprint, visit me on YouTube, where I trade live most days.

Trade well and prosper. BT