US Payrolls: Labor stabilization supports Fed hold – TD Securities

TD Securities economists expect February Nonfarm Payrolls (NFP) to slow to 60k, with 70k private jobs and a 10k decline in government employment. They see the unemployment rate steady at 4.3%, average hourly earnings (AHE) easing to 0.2% m/m and 3.7% y/y, and risks skewed toward a 4.4% unemployment rate and softer healthcare hiring.

Jobs slowdown but labour stabilizes

"We expect headline NFP will show a moderation in job gains to 60k in February from the unexpectedly strong 130k in January. We look for 70k private NFP and -10k government."

"We were already expecting a large portion of the moderation in private payrolls to come from healthcare, which supported most of the strength last month—in part due to Birth-Death adjustments that could mean revert."

"We also look for the UE rate to show continued stabilization, remaining at 4.3%. Note that the BLS's population adjustment will occur in this report, and they will revise the January figures which might affect the UE rate as well."

"Risks are skewed dovish for this report. We see a higher chance of an increase to a 4.4% UE rate rather than a decline to 4.2%. With lower new- and re-entrants driving the UE rate down in January, there could be a larger-than-expected reversal in February."

"We expect AHE moderated to 0.2% m/m, translating to 3.7% y/y. The 12th of February was Thursday, which tends to lead to weaker AHE prints."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)