NFP Preview: Jobs Data to Weather Tariff Storm, Dollar Set to Shine

The U.S. Non-Farm Payroll (NFP) report, due May 2, 2025, will gauge the labor market’s strength as Trump’s tariffs—145% on Chinese imports and levies on Canada and Mexico—threaten economic stability. Despite rising jobless claims, the jobs picture may hold steady, boosting the dollar. This article unpacks NFP expectations, grounds the forecast in fundamental labor indicators, and argues that a resilient report will strengthen the dollar against the pound, with ripple effects for assets like gold, unless the data significantly underperforms.

Consensus Expectations: Modest but Resilient

Experts project 133,000 new jobs for April, down from March’s 228,000, with estimates ranging from 120,000 to 150,000 due to tariff-related uncertainty. The unemployment rate is expected to remain at 4.2%, with average hourly earnings rising 0.3% month-on-month (3.9% year-on-year). The NFP survey, conducted mid-April, likely predates major tariff impacts, as businesses have paused hiring rather than cut jobs, experts note. Wage growth is pivotal—a steady 0.3% could signal persistent inflation, reinforcing the dollar’s strength against currencies like the pound.

Labor Indicators: Stability Amid Softening

Fundamental metrics suggest resilience but highlight risks. The ISM Manufacturing PMI Employment subindex rose to 46.5 from 44.7, indicating a slight hiring uptick, though below the 50 expansion mark. The ADP Employment report recorded 62,000 jobs, down from 146,000, reflecting private-sector caution. Initial jobless claims surged to 241,000 for the week ending April 26, up from 223,000 and above the 224,000 forecast, marking the highest since August 2023. The four-week claims average rose to 226,000 from 222,000. Experts estimate these support 120,000–150,000 jobs, but rising claims signal softening demand, urging caution.

Policy Divergence and Asset Implications

Federal Reserve Chair Jerome Powell’s hawkish outlook, delaying rate cuts until July, contrasts with the Bank of England’s dovish stance, with 100 basis-point cuts expected from May 8, pushing GBP/USD to 1.3295. Tariffs haven’t triggered widespread layoffs, but claims data warn of cooling demand, per experts. A strong NFP (above 150,000 or 0.4% wages) could drive GBP/USD below 1.3250, while a weak print (below 120,000) might lift it to 1.3345. Historically, NFP surprises move gold—experts note a 100,000-job miss could lift gold by $50, as seen in past weak reports, while a beat might push it toward $3,200, dampening its safe-haven appeal.

Technical Outlook and Market Signals

The U.S. Dollar Index (DXY) has rebounded but remains in a downtrend. A robust NFP could reverse this, strengthening the dollar. GBP/USD’s support at 1.3250 and resistance at 1.3345–1.3414 are critical. Fundamentals—steady jobs and wages—favor the dollar. Traders should monitor wage growth and March revisions (228,000) for direction. A strong report could pressure gold, while a miss might spark a rally in both gold and GBP/USD, though the labor market’s resilience tilts the odds toward dollar strength.

The April NFP is poised to show 133,000 jobs, 4.2% unemployment, and 0.3% wage growth, reflecting a labor market sidestepping tariff impacts for now. Indicators signal stability, but claims data raise concerns. A strong report could solidify dollar gains and weigh on gold, while a miss might lift GBP/USD and gold prices. As trade tensions escalate, the jobs data’s strength supports a dollar-bullish outlook, at least for the moment.