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Is the NFP number broken?

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Why does the US jobs market seem so resilient in the face of rising number layoffs across corporate USA? IGTV’s Angeline Ong takes a closer look at whether the NFP number needs updating.

 Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Monday 06 March 2023 

NFP puzzle

There's something strange about that NFP number. Many market watchers say that the surprisingly strong number that we saw, the shocking number in the previous month in February, given the weakness seen in the US economy and the number of job losses we've seen to date from big blue chips and tech companies, is not being reflected in this number.

Jobs conundrum

So, is that number and the way it's calculated, broken? Well, let's take a look at the chart here from Refinitiv and also Fathom Consulting. At first, the NFP doesn't take into account the growing number of gig workers. And secondly, the majority of jobs lost so far have come from white-collar tech workers. More than 122,000 global tech sector workers have been laid off since the start of 2023, according to data from Layoffs.fyi. Now, let's take a look at another chart here. This is the unemployment, rather, than benefits claimants. The thing is that many of these tech workers will have sizable payoffs, which on average could last up to 2 to 3 months, which explains why the US market, at least according to data points like jobless claims, appear resilient. So, where is the salad dressing? Well, watch out for when the severance payments run out and it could be soon. If these people living off their payouts don't get a new job fast, then that non-farm number could soon sour as the white-collar job losses leak into the wider economy.

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