NFP Preview: Forecasts from 10 major banks, employment continues to rise strongly

We still see strong demand for labor despite the high interest rates. At the same time, the renewed increase in immigration means that sufficient applicants are entering the market, which is why the jobs on offer can be filled. Monthly employment growth is no longer weakening. Accordingly, we expect job growth of 200K for February with an unchanged low unemployment rate of 3.7%.

We estimate gains in payrolls to moderate to 225K. We also see MoM gains in hourly earnings slowing to 0.2% and the unemployment rate staying at 3.7%.

We expect NFP growth to cool down to 180K and average hourly earnings to land at 0.2% MoM after the surprisingly strong January report.

We look for February NFP to show some moderation in job gains (190K) after the surprise to the upside in January. Household survey volatility will likely lead to a drop in the UE rate to 3.6%, while wage growth is expected to recede to 0.1% MoM after Jan's booming print. 

We expect February NFP numbers to show another solid employment gain of 260K, with growth mainly coming from the leisure and hospitality, health care, and government sectors. We expect the unemployment rate to hold steady at 3.7%.

Hiring could have slowed in the month if previously released soft indicators such as S&P Global’s Composite PMI were any guide, but this may have been offset by a decrease in the number of layoffs. At least that is what a drop in initial jobless claims between the January and February reference periods suggests. With these two trends cancelling each other, job creation could have remained strong at 190K. And while the household survey may show a larger gain following the losses recorded in January, this could have been partly offset by a rebound in participation, leaving the unemployment rate unchanged at 3.7%.

We forecast a gain of 200K and a rise in average earnings of 0.3%. 

The pace of hiring still appears to be on solid ground, and we anticipate payrolls to rise by 195K during February, just slightly above the current consensus. Furthermore, we look for the unemployment rate to remain unchanged at 3.7% and for average hourly earnings to ease to 0.2% during the month alongside normalizing supply and demand for workers. 

We expect the February payroll report to be another strong release with 220K jobs gained and a bounce back in average hours worked to 34.3 from the inclement weather during reference week of last month’s survey. Over the past few months, broad-based hiring has picked up and we expect more of that trend in February. Our expectation is health care and government sectors to account for 60% of job gains and all other sectors, which behave more cyclically, to account for the remaining 40%. The unemployment rate and participation rate should remain unchanged at 3.7% and 62.5% respectively in the month. But the most important piece of the payroll report to watch out for once again will be the revisions. Given the size and volatility of revisions lately, there seem to be equal chances of either solidifying or nullifying the recent picture of the labour market. 

We expect a 145K increase in NFP. December and January’s figures were likely boosted by stale seasonal adjustment factors, which positively offset non-seasonally adjusted declines in each of these months. Seasonal factors from February through June however will likely imply a downward adjustment to payroll growth. This should make for a still-declining trend of employment over coming months during the period in which hiring should typically pick up. We expect average hourly earnings to rise 0.4% MoM in February following a very strong 0.6% increase in January. This would still be a strong increase in wage growth, with average hourly earnings up 4.6% from a year ago. However, even with some rebound in aggregate hours worked in February, and thus softer average hourly earnings, markets will be particularly interested in the trend of average hours worked. Average hours worked dropped to a very low 34.1 hours/week in January, although this low level likely does reflect some weather and seasonal adjustment issues. The unemployment rate should rebound to 3.8% in February from 3.7% in January, although with risks that it remains at 3.7% if the participation rate remains subdued.