NFP Preview: Forecasts from 10 major banks, potential for upside surprise

The US Bureau of Labor Statistics (BLS) will release the February jobs report on Friday, March 4 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 are forecast to add 400K workers in February following 467K in January. The Unemployment Rate should fall 0.1% to 3.9% and the Underemployment Rate is predicted to rise to 7.2% from 7.1%. 


“Having averaged gains of 551K per month over the 12 months to January, a more modest (but still strong) gain circa 350K is expected in February. If participation is able to lift in the month, the risks favour a stronger gain for employment. While the economy is supply-constrained, the unemployment rate will remain the best indicator of labour market strength. Progress to near the historic low of 3.5% is expected during 2022 even with higher participation. If instead participation holds down as risks related to COVID-19 recede, a push towards a 3.0% unemployment rate is possible.” 


“Because the pandemic had depressed employment in the past two years, especially in the winter months, the statisticians now take a larger mark-up when adjusting for seasonal factors in these months. We, therefore, expect a similar increase in jobs for February (500K, consensus 400K).”

RBC Economics

“US February payrolls are expected to once again point to rising tension in the labor market. Employment likely increased again (380K). And no meaningful changes to the labour force are expected to drive the unemployment rate lower (3.9%) and push wages higher.” 


“We expect a reading of 555K, which is consistent with payroll gains over the past half-year. We think businesses must have been looking past the temporary surge and slowing service activity and thus proceeded to add to their staff at a time when labour supply was very low. The unemployment rate had been expected to move to a new low since the start of COVID-19, at a rate of 3.8%. However, in January, the unemployment rate ticked higher to 4.0% from 3.9%. We had expected a flat to slight increase in the labor participation rate; however, it rose even more than expected for January, up to 62.2 from 61.9 in December. We expect a more modest gain in the labor force for February and a rise in the participation rate to 62.3%. The more modest increase in the labor supply should result in a sharper unemployment rate decline.”


“Payrolls could have expanded 250K in the month. The household survey is expected to show a similar gain, a development which would translate into a one-tick decrease of the unemployment rate to 3.9%, assuming the participation rate stayed unchanged at 62.2%.”

Deutsche Bank

“We are expecting 300K (consensus 400K) with an unemployment rate ticking back down from 4 to 3.8% (consensus 3.9%).”


“Following a substantial upside surprise to job growth in January, We expect a similarly strong 510K increase in February. Average hourly earnings growth is expected to rise 0.5% MoM and 5.8% higher than a year ago with wage pressures seen generally strong in the coming months as firms still plan further wage increases. Markets will likely be most focused on this aspect of the February employment report, and upside risks will be particularly important for highlighting building inflationary pressures. And after rising modestly to 4.0% in January, we expect the US unemployment rate to decline to 3.8% in February, the lowest rate since the pandemic began and just 0.3pp above the 3.5% rate that prevailed in February 2020.”


“Indicators of activity in service sectors have improved lately and initial jobless claims have eased off since mid-January, suggesting that employers could have added 405K jobs in February. That gain in jobs could send the unemployment rate down by a tick, to 3.9%, while wage growth was likely strong at 0.5% given the ongoing labor shortage. We are too close to the consensus forecast to expect much market impact.”


“We expect employment to have continued to recover in February following the unexpectedly strong January report – despite the Omicron-led surge in COVID-19 cases. That said, we look for some of last month's boost to fizzle, though to a still firm job growth pace (TD: 300K, consensus: 400K). Seasonal adjustments were a factor in January and they will likely play a role again in February. In addition, despite firm job growth, we look for the unemployment rate to have remained steady at 4.0%, as labor force participation likely improved (consensus: 3.9%). We also expect wage growth to slow to a still strong 0.5% MoM from 0.7% in January, which would lift the YoY rate to an even stronger 5.8%.”

Wells Fargo

“Our forecast of 450K new jobs in February is predicated on lower COVID-19 cases, robust labor demand and improving labor supply. We project that US employment will recover to its pre-pandemic level by year-end, giving the Fed plenty of cover to tighten monetary policy at a steady pace this year as the central bank gets above-target inflation.”

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