Crypto markets are closely monitoring key US economic data this week to assess the health of the nation’s economy. As February commences, critical labor market reports — closely watched by the Federal Reserve—are on the calendar.

Given the potential impact on portfolios, traders may adjust their strategies around these upcoming events.

ISM Manufacturing

The Institute of Supply Management (ISM) will release the January ISM Manufacturing data on Monday, February 2, marking the first business day of the month. This nationwide survey of purchasing managers at manufacturing firms is widely viewed as a critical gauge of the US economy’s health.

The previous ISM manufacturing index was 49.3, with a consensus forecast of 50.0 for January. Readings above 50 indicate expansion, with the positive data boosting investor confidence in the economy’s strength. This could lead to increased risk appetite in the market.

If the ISM manufacturing index falls below the consensus of 50.0, it would suggest a contraction in the manufacturing sector. This could lead to concerns about the economy’s overall health and potentially negatively impact investor sentiment.

As a result, Bitcoin and other risk assets may experience increased volatility and downward pressure as investors seek safer assets during economic uncertainty.

“If ISM Manufacturing PMI rises, US stocks and the dollar strengthen, while crypto may drop due to tighter monetary policy expectations. If it falls, stocks can weaken, IHSG may be pressured by global sentiment, and crypto can go up or down based on risk sentiment and liquidity,” a user on X commented.

Job Openings

On Tuesday, February 4, the US Bureau of Labor Statistics (BLS) will release the December Job Openings and Labor Turnover Survey (JOLTS). The publication will provide data about the change in the number of job openings in that month and the number of layoffs and quits.

The data provides valuable insights regarding the supply-demand dynamics in the labor market, a key factor affecting salaries and inflation. In hindsight, the JOLTs survey showed that openings rose in November to 8.1 million.

Now, the consensus is also 8.1 million in December. Suppose the JOLTS data for December shows that job openings have increased as per the consensus forecast of 8.1 million or remain stable at that level; in that case, it indicates a strong labor market with ample opportunities for job seekers.

This positive economic indicator could improve consumer confidence, increased spending, and economic growth. In such a scenario, Bitcoin and other risk assets may benefit as investors anticipate a stronger economy and potential inflationary pressures.

Of note is that the state of the labor market is a key factor for Fed officials when setting policy. Therefore, if the data shows unexpected weakness, it could prompt a more dovish stance from the Fed. This could lead to lower interest rates or other accommodative measures.

Conversely, strong labor market data could push the Fed towards a more hawkish stance, possibly resulting in tighter monetary policy.

ADP Employment

The ADP Employment Change, released by Automatic Data Processing Inc., measures changes in private-sector employment in the US. An increase in this indicator typically suggests stronger consumer spending and supports economic growth. As a result, a high reading is generally bullish, while a low reading is considered bearish.

Wednesday’s ADP Employment Change report is an early indicator ahead of Friday’s official jobs data. Following December’s modest figures of 122,000, analysts are closely monitoring for signs of a slowing labor market.

A weaker-than-expected report could lift markets on hopes of Federal Reserve easing. At the same time, a stronger-than-expected result might trigger short-term volatility as traders adjust expectations for rate cuts.

“With earnings from tech giants and key economic data like ADP employment and ISM reports, this week could be a major inflection point for both equities and macro trends. Expect high volatility,” a crypto analyst on X observed.

Initial Jobless Claims

On Thursday, February 6, the weekly jobless claims will also shed light on the health of the US labor market. The previous initial jobless claims data came in at 207,000 for the week ending January 25. The median forecast is 213,000 for last week.

Meanwhile, weekly unemployment claims have been falling steadily for several weeks after hitting their highest level in October of more than over. Nevertheless, US initial jobless claims declined, continuing the rise in jobless claims.

This points to an environment where employers try to retain their employees for as long as possible. However, employees who lose their jobs find it difficult to get a new job.

“Thursday’s release of Initial Jobless Claims will provide an early indication of the labor market’s health, particularly in response to any economic headwinds. This metric is critical for gauging short-term shifts in employment and consumer confidence. The day also spotlights a broad spectrum of stocks,” Markets Today indicated.

US Employment

The January employment report is due on Friday, February 7. It is expected to sum up US economic data on the labor market for the last month. Economists expect January’s employment report will show payrolls dropped to 175,000 after recording 256,000 in December.

The Friday data will come after core personal consumption expenditures (PCE) prices rose to 2.6% in December. This PCE inflation rate met expectations of the Dow Jones economic estimate, while the Fed’s target inflation goal remains 2%.

Ahead of these US economic data, BTC is trading at $93,895, a 6.31% drop since Monday’s session opened.