US Nonfarm Payrolls Prep

On Friday, the 7th of March, at 08:30 ET, the BLS releases the latest Employment Situation report representing January.
Here are some views on what to expect.

Overview
For Nonfarm Payrolls, the median forecast expects it to move up modestly to 160k from 143k.
According to a survey of 55 qualified economists, the highest estimate is 300k, and the lowest is 100k.

As for the Unemployment rate, the median forecast expects it to remain unchanged at 4%.
The highest estimate is 4.1%, the lowest is 3.9%.

General Expectations
Despite inflation being the biggest worry in the Fed’s dual mandate at the moment, the employment situation in the US is still highly monitored by the markets and Fed officials, with NFP holding the spotlight for traders to hopefully gain an insight into the economy’s health but also for signs that will open the door for more potential Fed rate cuts to stimulate the economy.
It’s an extremely murky line as to what the data will represent; a too-high NFP headline figure shows great strength in the economy, however, closes the door for a case to be made for more potential rate cuts.
If we were to see surprisingly strong employment data with NFP coming in much higher than expected, like last time, and the Unemployment rate hovering around it’s current level or slightly declining, then we could expect to see strength in the dollar and yields with weakness following in US stocks as traders price in less cuts for 2025.
If we were to see NFP decline much more than is expected, possibly even to it’s forecast, there’s a likelihood to see strength in US Stocks and weakness in the dollar and bond yields as traders hope to see the potential for more rate cuts for 2025.

Commentary
Wells Fargo
Nonfarm payrolls rose a weaker-than-expected 143K in January as severe winter storms and the Los Angeles wildfires held back hiring during the month. Despite the soft outturn, upward revisions to prior months’ data showed hiring having more clearly firmed after wobbling this past summer, with the three-month moving average of net job creation up to 237K.

We suspect the recent pace of job growth overstates underlying labor demand and supply today. The net share of small businesses planning to hire slipped in January, regional Federal Reserve Bank surveys show employment in the service sector was essentially unchanged in February, and job postings remain near multiyear lows. Consumer confidence in the labor market also has resumed its deterioration recently, evident in the labor differential falling to a four-month low in February. Taken together, these data point to a slower trend in hiring.

We estimate nonfarm employment increased by 170K in February. Among industries, federal government payrolls are expected to slip by 5-10K amid ongoing efforts to shrink the workforce; see the Topic of the Week for more detail. The anticipated moderation in job growth leaves some scope for unemployment to rise. We look for the unemployment rate to tick up a tenth to 4.1%. These looser conditions favor a cooling in wage growth, which was unexpectedly hot in January. We forecast average hourly earnings to rise 0.3% in February, a few tenths softer than its 0.5% increase the prior month.

Unicredit
We expect nonfarm payrolls rose around 150k in February, little changed from the 143k rise in January.
Severe weather, which weighed on January payrolls, largely persisted through the February survey reference week.
Timelier indicators of labour demand have shown signs of stabilization (including Indeed job postings, NFIB hiring intentions, and continuing claims), while layoffs have remained low. DOGE-driven cuts to federal jobs are unlikely to impact the February data.
With immigration slowing over recent months, the rise in employment needed to absorb population growth is easing.
We expect the unemployment rate probably held at 4.0%, with average hourly earnings rising 0.3% mom.

Bank of America
February non-farm payrolls are likely to print at a robust 185k. Government jobs are expected to come in at a slightly smaller than average 25k due to the federal hiring freeze.
Given the muted claims data in the survey week, we do not expect DOGE driven job cuts to be a sizable drag on Feb data.
Although, the colder than average weather could pose some downside risks.
We expect the Unemployment Rate to remain at 4%. Average Workweek Hours, which were impacted by extreme weather in Jan will likely see an uptick (34.2), leading to a decline in Average Hourly Earnings.

Previous Release
US Nonfarm Payrolls came in lower than expected at 143k on expectations of 175k, and down from the upwardly revised prior of 307k)
US Unemployment Rate came in lower than expected at 4%, on estimates and the prior of 4.1%.

With this last report, we also saw the NFP benchmark revision for 2024 revised down by 589,000, reducing each NFP report released last year by an average of around 49,000.

Following this, we saw a mixed reaction in the markets, mainly whipsawing, as the report and revisions did show that the jobs market is weaker than the markets had anticipated, but not in a way that flagged any warnings to the Fed that the job market was too weak, and not adding to fears that would warrant potential policy intervention by the Fed.