Why is it important?

Estimate ranges are important in terms of market reaction because when actual data deviates from expectations, it creates a surprise effect. Another important input in market reaction is the distribution of forecasts.

In fact, although we may have a range of estimates, most predictions may be clustered at the upper end of the range, and even if the data comes out within the range of estimates but at the lower end of the range, it can still create a surprise effect.

Distribution of forecasts

Non-Farm Payrolls

• 120K-200K estimate range
• The 140K-185K range is the most clustered
• 160K consensus

Unemployment rate

• 4.4% (2%)
• 4.3% (30%)
• 4.2% (65%) – consensus
• 4.1% (3%)

Average hourly earnings y/y

• 4.1% (10%)
• 4.0% (67%) – consensus
• 3.9% (20%)
• 3.8% (3%)

Average Hourly Earnings M/M

• 0.4% (13%)
• 0.3% (70%) – consensus
• 0.2% (15%)
• 0.1% (2%)

Average Weekly Hours

• 34.4 (4%)
• 34.3 (85%) – consensus
• 34.2 (11%)