What’s expected:
- Consensus estimate +200K (range +120 to +290K)
- Private +160K estimate vs +317K prior
- January +353K
- Unemployment rate consensus estimate: 3.7% vs 3.7% prior
- Participation rate: 62.5% prior
- Prior underemployment U6 7.2%
- Avg hourly earnings y/y exp +4.4% y/y vs +4.5% prior
- Avg hourly earnings m/m exp +0.3% vs +0.6% prior
- Avg weekly hours exp 34.3 vs 34.1 prior
February jobs so far:
- ADP report +140K vs +150K expected and +111K prior
- ISM services employment 48.0 vs 50.5 prior
- ISM manufacturing employment 45.9 vs 47.1 prior
- Challenger job cuts 84.6K vs 82.3K — 11-month high
- Philly employment -10.3 vs -1.8 prior
- Empire employment -0.2vs -6.9 prior
- Initial jobless claims survey week 202K — a five-week low
At the time of the January non-farm payrolls report, the market was pricing in 142 basis points in rate cuts this year. That’s since fallen to 92 bps.
Eyes will also be on the household report. In January it a second consecutive drop in the number of employed people, exactly zero jobs growth in the past year, rising unemployment and more people who are looking for a job.
Wages will be a key focus and the 0.6% jump last month was a big concern. However much of that gain was due to a drop in average weekly hours (that’s the denominator) so it might have been an illusion. I think risks are for an undershoot for earnings and that could further cool the US dollar — all else equal.
US nonfarm payrolls chart
According to BMO, 44% of previous
unemployment reads in February have been lower-than-expected, 24% have been
higher-than-estimates, and 32% have matched forecasts