NFP Preview: Forecasts from 10 major banks, many new jobs created

The US Bureau of Labor Statistics (BLS) will release the February jobs report on Friday, March 10 at 13:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of 10 major banks regarding the upcoming employment data.

Nonfarm Payrolls in the US are forecast to rise by 203K following the 517K increase recorded in January, with the unemployment rate seen steady at 3.4% and average hourly earnings picking up to 4.8% year-on-year vs. 4.4% in January. 

Commerzbank

“Although much lower job gains are to be expected for February, at 240K they should be far from weak. Such an increase in employment would be noteworthy because the US labor market is already extremely tight with an unemployment rate of 3.4%, the lowest since 1969, and this figure is unlikely to have changed in February. Accordingly, we expect the report to support expectations for further rate hikes. We forecast a 25 bps hike at each of the Fed's next three meetings.”

Danske Bank

“After the January effects from warm weather and heavy seasonal adjustments fade, we see NFP growth moderating to 220K in February. The nominal terminal rate has been repriced 60 bps higher since the January NFP, which we consider aggressive to be based on only one month worth of data. A sudden softer release could well spark temporary rallies, and hence we still like to hold on to our call of terminal rate at 5.00-5.25%. That said, the bar is low for including another 25 bps for June.”

ING

“We have pencilled in a 200K jobs gain for February but we have next to no confidence. Any random guess between -500K and +500K would be just as valid as our own guest. Business surveys of employment remain soft and job loss announcements are up 440% year-on-year and there is a high chance of revisions to January’s 517K jump. Given that pretty much anything could happen in this report, the likelihood of significant market volatility in the hours and potentially days around the jobs report is high.”

SocGen

“We expect another 280K increase in February. An increase of 150K per month over time should result in a declining unemployment rate. The unemployment rate of course is a separate survey. The 150K threshold is close to the rate of growth in the working-age population, and exceeding that pace would ultimately drive the unemployment rate lower.” 

NBF

“We expect payroll growth to have decelerated to 190K in the month, which would remain very solid given the increasingly limited number of people remaining on the sidelines. The household survey is expected to show a similar gain, something which would leave the unemployment rate unchanged at 3.4%, assuming the participation rate stayed put at 62.4%.”

Deutsche Bank

“We expect 300K for both headline and private payrolls. As with January, February was also mild weather-wise for the survey week (which can mean less leisure, hospitality and retail layoffs), although not as much as in the prior month. So the temperature will likely still be an influence. There was a reasonable question mark about seasonal distortions in the last report so who knows how that will impact this week's report. We acknowledge the seasonals but the revisions at the same time to last year's payrolls data suggest the labour market was stronger going into 2023 than previously thought, which means a fair amount of the recent job gains was likely genuine. Unemployment is expected to stay at 54-year lows of 3.4% with the risks it ticks down a tenth.”

CIBC

“We expect a brisk pace of hiring to have created 205K jobs in February. An improvement in the weather in January likely overstated job gains at the start of the year and adds downside risk to February’s print. We expect the unemployment rate to remain at 3.4%. We’re roughly in line with the consensus expectation, which could limit any market reaction.”

Citibank

“Last month’s seasonal adjustment that resulted in a large boost to employment should reverse in February as some workers return to payrolls. Meanwhile, the unemployment rate to remain at 3.4% as the household survey could be somewhat softer than the 255K payrolls after strong gains over the last few months.”

Wells Fargo

“We look for hiring in February to downshift from the torrid January pace but to remain strong at 270K. Equally important to Federal Reserve officials will be data on labor force participation and average hourly earnings. Slowing wage growth would be a sign that labor supply and demand are coming back into a healthier balance.”

Credit Suisse

“We expect job gains to slow to 200K in February after a surprising reacceleration to start the year. The unemployment rate fell sharply in January and we expect it to go sideways in this report at 3.4%. Average hourly earnings have decelerated in the past six months, and we expect this trend to continue with a 0.3% MoM increase in February. Underlying wage growth appears to be moderating across a range of measures and lead indicators, but the current pace of growth is still uncomfortably high for the Fed.”

About the Nonfarm Payrolls

The Nonfarm Payrolls released by the US Department of Labor presents the number of new jobs created during the previous month, in all non-agricultural business. 

The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the US Federal Reserve. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. 

Generally speaking, a high reading is seen as positive (or bullish) for the US Dollar, while a low reading is seen as negative (or bearish), although previous month's reviews and the Unemployment Rate are as relevant as the headline figure