3 numbers to watch: US NFPs, Eurozone Retail Sales, Canadian PMI

It that time of the month again, if you'll pardon the expression. Time for arguably the biggest economic report of the all, the US Employment report. While not the only report to be released today (we have Eurozone PMI and Retail Sales as well as Canadian Ivey PMI) it is without a doubt the one to watch.

When it comes to non-farms, we are not far from consensus (160k) with our target being 140k based on 156k from a simple model of Private Payrolls and -16k from the public sector. We have generated the model by looking at hard data such as ADP Employment and Initial Jobless Claims, and also survey data such as employment components from ISM Manufacturing and regional surveys (ISM Non-manufacturing report was not available at the time of the model run). We find the number of principal components to be 1. This is the number of components that gives the smallest pseudo out-of-sample Root Mean Square Error during the last 36 months (3 years). This results in a 1-factor model with a forecast of 156k. Somewhat below consensus's Private Payrolls forecast of 165k.

Apr. US Nonfarm Payrolls & Unemployment Rate (12:30) to show slower progress: Though today's report is expected to show moderate growth in payrolls of 160k and an unchanged Unemployment Rate of 8.2% according to consensus, the ADP Employment report two days ago enhanced the worry that we are about to see weaker growth in the US. We concur with this view - which is why we stay with our 2% GDP target - and look for weakness in the second quarter. But we do not look for prolonged weakness and expect the economy to pick up in the second half of the year.

• Mar. Eurozone Retail Sales (09:00 GMT) to stay unchanged: The consensus looks for a second consecutive flat month of terms of sales in March and judging by the Retail PMI for the Eurozone there is not much to look forward to in the coming months. The PMI index did rise a single point to 49 (though that is still contraction) in March, but then plummeted to an abysmal 41.3 in April, the lowest since November 2008 when it reached a record low of 40.8.

  

• Apr. Canadian Ivey PMI (14:00) to ease lower: The Canadian economy has slowed down in line with global demand and a weaker commodity spectrum, but continues to put up moderate growth numbers. The Leading Indicators Index is one series pointing to continued growth (+5.24% y/y) and today's Ivey PMI is another. This came in at a solid 63.5 in March and consensus targets a minor decline to 61, which is consistent with monthly GDP growth of 0.1-0.2%.

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We're testing Google Hangouts at TradingFloor.com.  If you'd like to watch today's nonfarm payroll release with Saxo Bank chief FX strategist John J. Hardy in a Google Hangout, send an email to JohnJHardyFX@gmail.com. You'll need to have a webcam and GooglePlus account, which is free.  Space is limited, so first come, first served.