Can markets trust Nonfarm Payrolls?
April's US nonfarm payrolls paint a picture of deceptive stability. As experts point out, on closer inspection, it looks more like a deep freeze. Despite the reported gain of 115,000 jobs, those figures pale against February's slump and the broader trend over the past year. Since May last year, the average monthly gain has been a meager 21,000 — catastrophic compared with the pre?crisis 2017–2019 period, when the economy generated roughly 177,000 jobs per month on average.
It's important to note that official statistics are traditionally subject to large retrospective revisions that annually "write off" up to a million jobs, effectively wiping out the current modest gains and turning the reports into an illusion of resilience. Looking under the hood of these numbers, it becomes clear that the US labor market is now kept on life support by just a few sectors — notably healthcare and social assistance. These segments are showing abnormally high growth, adding on average about 55,000 positions per month, even above levels seen in calmer years.
The other four sectors showing growth only register symbolic gains that do not come close to offsetting declines in core industries:
- food service
- construction
- personal services
- sports
Excluding the contribution of medical workers, the US economy loses roughly 34,000 jobs per month — a profile consistent with a developing recession. The most worrying deterioration is in strategically important sectors that were once growth locomotives. Government, telecommunications, finance, insurance, transportation, and manufacturing are all shedding workers in sync. Professional and business services — which grew by about 30,000 jobs per month a couple of years ago — now show steady negative dynamics.
Even retail employment has flatlined. In fact, two?thirds of US economic sectors are now contracting payrolls. The current employment configuration signals that private capital has stopped expanding, and the "frozen" labor market is only waiting for the moment when official bodies can no longer mask industrial and financial weakness behind healthcare employment figures. This week, Kevin Warsh may be appointed the next Fed chair. Given that two?thirds of sectors are already cutting jobs, can he afford to ignore these recessionary signals in favor of fighting energy?driven inflation?
Digital sovereignty and market immunity
The United States is moving into the active phase of the Stargate project, under which an alliance of major tech and financial corporations intends to invest up to $500 billion in creating national AI infrastructure. The $100 billion build?out in Texas is becoming the physical embodiment of Washington's drive for full technological independence from Asian supply chains and a response to challenges from China. But rapid progress creates new threats, such as Anthropic's Mythos model, which can autonomously find software vulnerabilities — prompting the White House to consider strict oversight of powerful models along the lines of medical licensing.
Against this background, investment giants such as Blackstone are starting to view data centers as a new class of strategic real estate, pushing traditional ports and pipelines into the background. Paradoxically, equity markets are showing remarkable indifference to the ongoing war in the Middle East and oil above $100 per barrel. While investors celebrate new record highs on the back of the AI boom, experts warn of a calm before the storm: the depletion of global energy stocks will inevitably collide with the reality of a prolonged geopolitical deadlock.
Euphoria on the brink of overheating
Friday's US labor data were a real gift for investors, delivering what analysts call an ideal balance.
- The 115k gain in new jobs significantly exceeded modest forecasts of 65k.
- At the same time, wage growth of 3.6% came in below the market's worrying expectation of 3.8%.
This mix suggests a moderate cooling of the economy without signs of an immediate collapse, allowing the Fed to remain in a wait?and?see mode.
An additional positive signal was a downward revision in inflation expectations, confirming that even a protracted conflict with Iran and instability in energy markets have not yet destroyed consumers' confidence in long?term stability. The S&P 500 and Nasdaq continue to push to record highs. Even mixed tech headlines — such as slower revenue at TSMC and an 11% plunge in CoreWeave shares — have not dimmed investor faith in AI's limitless potential. Since early April, the S&P 500 has been up nearly 17% and remains deep in overbought territory.
The market's remarkable composure in the face of rising energy costs is notable, since mass disregard for fundamental geopolitical risks often precedes a sharp shift in sentiment. This week, markets shift focus to inflation data: in Europe, those numbers are likely to confirm higher heating costs due to the energy crisis, while the US picture looks more balanced. Although the US annual CPI could jump from 3.3% to 3.7% because of the "Iran factor," the month?to?month trend promises to be less alarming.
Nevertheless, inflation in the US has settled firmly in the 3–4% range — well above the Fed's target — keeping the hawks on alert. A key development to watch is the emerging divergence between central banks: while the Fed hesitates, the European Central Bank may begin raising rates as soon as June. That difference weighs on the dollar's medium?term outlook, although for now the greenback is still influenced by oil prices. The current dollar rebound looks weak against the backdrop of sharp geopolitical headlines, creating interesting opportunities for experienced traders to sell the dollar at volatility peaks.
At the same time, investors are holding their breath ahead of Donald Trump's visit to Beijing, the first since 2017. The president needs a high?profile win to distract voters from setbacks in Iran, but China is stronger than ever. Despite rising import oil prices, China's trade surplus jumped 65% in April, and Beijing's accumulated experience with deflation allows it to handle energy pressure far more effectively than many Western countries. Will Trump's trip spark a new "big deal," or will Beijing use the US's vulnerability in the Gulf to cement its technological lead?
11 May
11 May, 04:30 / Australia / Building approvals (Mar) / prev.: -14.9% / actual: 16.1% / forecast: 9.0% / AUD/USD – down
Building approvals in Australia rose 16.1% in February, recovering from a deep slump. The long?run average monthly change since 1984 is 2.49%, highlighting the large amplitude of current swings versus trend. The March report is expected to show a slowdown in approvals; confirmation would signal cooling construction activity and weigh on the AUD.
11 May, 04:30 / China / Consumer inflation (Apr y/y) / prev.: 1.3% / actual: 1.0% / forecast: 0.9% / Brent – down, USD/CNY – up
China's CPI slowed to 1.0% y/y in March, led by a sharp drop in food prices (vegetables, pork). Despite state price controls on fuel to protect the domestic market, core inflation showed its strongest rise since 2019. April is forecast to show a further deceleration in consumer prices. Confirmation would signal weak domestic demand and push Brent lower and the yuan weaker.
11 May, 04:30 / China / Producer prices (Mar y/y) / prev.: -1.4% / actual: -0.9% / forecast: 0.5% / Brent – up, USD/CNY – down
China's producer prices turned up by 0.5% y/y in March, ending the longest deflationary spell in decades. The reversal was driven by sharp rises in global energy prices and improved demand balances in parts of heavy industry. The next report is expected to keep positive momentum. Confirmation would support Brent and strengthen the yuan.
11 May, 17:00 / US / Existing?home sales (Apr) / prev.: 4.13m / actual: 3.98m / forecast: 4.05m / USDX – up
US existing?home sales fell 3.6% in March to 3.98 million annualized — the weakest in nine months. Despite higher supply, median home prices hit a record high, and falling consumer confidence continues to dampen buyer activity. April is forecast to show a modest recovery; confirmation would indicate stabilization in the housing market and support the dollar.
12 May
12 May, 02:01 / United Kingdom / Retail sales (Apr m/m) / prev.: 0.7% / actual: 3.1% / forecast: 0.8% / GBP/USD – down
UK retail sales rose 3.1% year?on?year in March, recovering from a prolonged slump thanks to an early Easter. The food sector posted growth well above year?average levels, while travel?related sales remained under pressure due to Middle East tensions. April is expected to show a sharp slowdown in retail growth. Confirmation of the forecast would signal the end of the holiday effect and weigh on the pound.
12 May, 02:30 / Japan / Household spending (Mar) / prev.: -1.0% / actual: -1.8% / forecast: -1.5% / USD/JPY – down
Household spending in Japan fell 1.8% y/y in February — the third consecutive decline in personal consumption. High prices squeezed budgets and forced consumers to cut spending on:
- transport
- communications
- education
Food spending also fell, offsetting prior gains. Housing, clothing and healthcare showed some recovery, while spending on culture and leisure stayed relatively high. Month?on?month spending rose for the first time in three months (+1.5%). March is forecast to continue the negative trend with modest improvement; confirmation would support the yen.
Australia's consumer sentiment index plunged 12.5% in April to a two?and?a?half?year low. The sharp deterioration was driven by:
- a spike in fuel prices due to the Middle East conflict
- another interest?rate increase by the RBA
Household financial positions and one?year outlooks fell double digits, and fears of job loss hit multi?year highs. May is forecast to show a small rebound in optimism. If confirmed, that would signal stabilizing sentiment and support the Australian dollar.
12 May, 03:30 / Australia / Westpac–Melbourne Institute consumer sentiment (May lead) / prev.: 91.6 pts / actual: 80.1 pts / forecast: 80.0 pts / AUD/USD – down
In April, the sentiment index fell to 80.1 — the largest monthly drop since the pandemic began. The decline reflected deep pessimism about the cost of living and the future path of interest rates. The May release is expected to keep the index low. Confirmation would signal a prolonged weakness in consumer demand and weigh on the AUD.
12 May, 04:30 / Australia / NAB business confidence (Apr) / prev.: 0% / actual: -29% / forecast: -32% / AUD/USD – down
Australia's business confidence plunged to -29 in March — one of the weakest readings on record. Business sentiment deteriorated amid the global oil shock from the Iran war. While activity remained broadly stable, corporate profitability is under pressure from rising input costs that cannot be fully passed to consumers. The RBA warned inflation could hit 5% in Q2. April is forecast to show further weakening confidence. Confirmation would signal critical risks for the business environment and weaken the AUD.
12 May, 08:00 / Japan / Leading Economic Index (Preliminary, Mar) / prev.: 112.0 / actual: 113.3 / forecast: 114.6 / GBP/USD – up
Japan's leading economic index for February was revised up to 113.3 — the best in several years. The improvement was supported by a resilient labour market, with unemployment down to 2.6%, and government stimulus for consumption. Despite higher costs from more expensive fuel, overall economic prospects are gradually improving. March is expected to show further strengthening; confirmation of the forecast would support the pound.
12 May, 09:00 / Germany / Final HICP inflation (Apr) / prev.: 2.0% / actual: 2.8% / forecast: 2.9% / EUR/USD – up
Germany's EU?harmonized annual inflation rate for March was revised up to 2.8% — a two?year high. The long?run average over the past three decades is about 1.93%. The final April report is expected to confirm further acceleration. If the data match the forecast, persistent price pressure would support the euro.
12 May, 12:00 / Eurozone / ZEW Economic Sentiment (May preliminary) / prev.: -8.5 / actual: -20.4 / forecast: -20.0 / EUR/USD – up
Eurozone economic sentiment fell in April to its lowest level since late 2022. The sharp deterioration in analysts' expectations was driven by:
- escalation of the Middle East conflict;
- associated supply chain and energy security risks
May is forecast to show a slight improvement, though expectations will remain deeply negative. Confirmation would signal stabilization of pessimism and support the euro.
12 May, 12:00 / Germany / ZEW Economic Sentiment (May preliminary) / prev.: -0.5 / actual: -17.2 / forecast: -20.5 / EUR/USD – down
Germany's economic sentiment index plunged in April amid fears of long?term energy shortages and falling investment. The hardest?hit industries include:
- chemicals
- pharmaceuticals
- metals
Construction also turned pessimistic. A further drop is forecast for May; confirmation would deepen pessimism in Europe's largest economy and weigh on the euro.
12 May, 13:00 / US / NFIB Small Business Optimism (April) / prev.: 98.8 / actual: 95.8 / forecast: 96.1 / USDX – up
The NFIB small?business optimism index fell to an annual low in March amid rising oil prices and growing uncertainty. Owners reported pressure on profits and worsening business conditions despite tax?benefit support. April is forecast to show a modest recovery; confirmation would signal small businesses adapting to higher costs and support the dollar.
12 May, 15:15 / USA / ADP private payrolls (4?week) / prev.: 40.25k / actual: 39.25k / forecast: — / USDX – volatile
Four?week average private hiring through mid?April stabilized at 39,250 jobs per week. The pace shows some slowdown after the March acceleration. Without a clear forecast for the next period, these trends will contribute to high dollar volatility.
12 May, 15:30 / USA / CPI (Apr y/y) / prev.: 2.5% / actual: 2.5% / forecast: 2.6% / USDX – volatile
Core inflation in the US was 2.5% y/y in March, with continued price pressure in services, including transport and healthcare. Clothing price increases offset cheaper used vehicles and trucks. April is forecast to tick up slightly. Confirmation would produce strong dollar?index volatility.
12 May, 23:30 / USA / API weekly crude inventories / prev.: -1.79 mln bbl / actual: -8.1 mln bbl / forecast: — / Brent – volatile
US crude stocks fell by 8.1 million barrels in the week to early May — the third consecutive weekly draw. Gasoline and distillates also declined sharply, and there were outflows from Cushing storage. With no clear forecast ahead, continued shortages will keep Brent volatile.
Speeches and events:
12 May, 10:15 / US / John Williams (President, New York Fed) — USDX 12 May, 13:40 / Eurozone / Frank Elderson (ECB Supervisory Board) — EUR/USD 12 May, 20:00 / US / Austan Goolsbee (President, Chicago Fed) — USDX 12 May, 20:30 / UK / Sam Woods (Deputy Governor, BoE) — GBP/USD 13 May, 15:15 / Eurozone / Claudia Buch (ECB Supervisory Board) — EUR/USD 13 May, 17:00 / UK / Catherine Mann (MPC Member, BoE) — GBP/USD 13 May, 18:30 / US / Susan Collins (President, Boston Fed) — USDX 13 May, 20:15 / US / Neel Kashkari (President, Minneapolis Fed) — USDX 13 May, 22:00 / Eurozone / Philip Lane (ECB) — EUR/USD 13 May, 22:15 / Eurozone / Christine Lagarde (ECB President) — EUR/USD
Comments from senior central bankers are scheduled on these dates; their remarks typically cause FX volatility as they may signal future policy intentions.
