US data Friday — previews of the nonfarm payroll for February

I posted a preview of the NFP data from invest bank Goldman Sachs earlier

  • Goldman Sachs NFP preview

It seems like I posted it last week its been such a long day today!
A few more (bolding mine):


the February employment report, we expect nonfarm payrolls to rise by
200k and for private payrolls to rise by 195k.

  • Government payrolls make up the difference, and we look for a modest increase of 5k on the month.
  • Factors influencing our outlook for another solid month of employment growth include initial claims data, which have ticked lower and continue to suggest low rates of labor market stabilization. We look for strength in both goods and services sector payroll growth, consistent with recent trends, as PMI data point to still-solid rates hiring in manufacturing.

Elsewhere in the report,
we look for the unemployment rate to decline by one-tenth to 4.0%,
and for average hourly earnings to rise by 0.1% m/m and 2.7% y/y.

  • One
    factor behind our outlook for slower average hourly earnings is
    average weekly hours, which we expect will rebound to 34.4 in
    February, from 34.3 in January. We felt some of the buoyancy in
    hourly earnings in January was a result of the unexpected decline in
    hours. We expect some of that to reverse this month.
    In addition,
    many of the one-time payments and special bonuses announced around
    year-end are excluded from the BLS calculations for average hourly


After inflationary fears were triggered by the sharp rise in average
hourly earnings in January, all eyes are likely to be on these
figures again
in … labour market report for February.

  • Although the tight labour market argues for rising wage pressure, the
    clear gain in January was probably also attributable to special
    factors. In January, for example, an unusually large number of
    working hours were lost due to the bad weather, which could have
    distorted the average hourly earnings upwards. This phenomenon was
    particularly extreme with the hurricanes in September, when average
    wages actually fell in October. In addition, the fact that many
    companies made one-off payments to employees due to the tax cuts
    could have also played a role.

We expect wages to rise by 0.2%, which
would push down the year-on-year rate down from 2.9% to 2.8%.

At the
same time, the strong rise in nonfarm payrolls is likely to continue
on the back of strong demand
. We expect a rise of 220k (consensus
195k). This should lower the unemployment rate by one tenth to 4.0%.


expect a strong, 210k increase in nonfarm payroll employment in
February, with 205k from the private sector and 5k from government

  • Relevant employment indicators remained elevated during the month as initial jobless claims stayed near historical lows and business survey employment indices remained firmly within expansionary territory.
  • Underlining the favorable state of the US labor market, the Conference Board’s labor market differential — the difference between those reporting jobs «plentiful» versus «hard to get» — increased 3.8pp to 24.7 in February, the highest reading since 2001.

More important, given the market reaction
to January’s wage data, we expect a 0.2% (0.19%) m-o-m increase in
February’s average hourly earnings (AHE).

  • January’s AHE reading
    was partly boosted by relatively weak aggregate hours data, likely
    weather- related and was primarily focused among supervisory workers.
    Our forecast of 0.2% m-o-m corresponds to a 2.8% y-o-y increase, a
    slight dip from the 2.9% reading in January.

Finally, we expect the
unemployment rate to decline 0.1pp to 4.0% in February, consistent
with our expectation that job growth will continue to outpace the
number of new labor force entrants.

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