US NFP should continue to come in near trend of 200K – RBC CM

In view of the analysts at RBC Capital Markets, the US payroll report is slated to come out during the Fed communications blackout (ahead of the March meeting) and the headcount numbers (NFP) should continue to come in near trend of 200K.

Key Quotes

“Jobless claims continue to plumb the depths (at 223K, they just hit yet another cycle low and record low in LF-adjusted terms), employment metrics from business surveys continue to perk up (look at hiring intentions from the small business space), and job openings continue to register in the 5 million neighbourhood.”

“We think wages will be the linchpin to whether the Fed “likes” this report enough to vindicate hiking in March. Given the lacklustre 0.1% m/m in average hourly earnings in Jan, you wouldn’t know that nearly 40% of US states had increased their minimum wage rates substantially. Given the number of folks impacted, this should have translated into a 0.3% boost to AHE. Note that we didn’t even see this play out in production worker wages, which rose 0.18% on the month. So it’s possible we get some payback here via either an upward revision to the January read or a much firmer February.”