Friday morning, we get the biggest labor market indicator of the month: February nonfarm payrolls (NFP), due out at 8:30 AM ET.
Economists expect nonfarm payrolls to rise by 165,000 after adding 157,000 the month before. Private payrolls are expected to increase 170,000 after posting a gain of 157,000 in January, and manufacturing payrolls are expected to increase by 8,000, compared with a 4,000 rise in January.
On Wednesday, ADP's employment report suggested that the U.S. economy added 198,000 private payrolls in February. This was better than the 172,000 figure predicted by economists.
On Thursday, weekly initial jobless claims fell to 340,000 from 344,000 the week before, below estimates of an increase to 355,000.
A few economists, like Deutsche Bank's Joe LaVorgna, have mentioned a possible distortion in the data arising from the effects of a snowstorm that hit the Northeast region in early February.
However, the strong ADP reading Wednesday could cast a bit of doubt on that thesis. On Wednesday, LaVorgna raised his NFP estimate to 180,000 from 125,000 before the ADP release.
Jim O'Sullivan of High Frequency Economics acknowledges the robust ADP reading, but is not adjusting his estimate upward like LaVorgna.
Sullivan still thinks weather is going to be a factor in tomorrow's release:
More relevant from a timing perspective, the ADP private payrolls estimate was 198K, above the consensus for the BLS data tomorrow: +170K for comparable private payrolls and +160K in total.
Despite the strength in ADP, we have not changed our 130K forecast for the BLS payrolls series, and 140K for private payrolls. Indeed, we had forecast a fairly strong 180K rise in the ADP series. Our forecast for the BLS data allows for a 50K drag from the big Northeast snowstorm that struck just prior to the sample week; such weather effects tend to be much more noticeable in the government data than in the ADP series.
Société Générale economist Brian Jones is one of the most bullish on the Street ahead of tomorrow's release. Below is his take:
We expect the Bureau of Labor Statistics (BLS) to report that the employment situation improved markedly in February. The decline in the mean number of persons filing initial claims for unemployment insurance over the five weeks heading into last month’s establishment survey period, along with a sizable reduction in regular state benefit recipients between canvasses, suggests that nonfarm payrolls expanded by 225,000, besting the 200,000 average posted over the prior three-month span. Projected readings on average hourly earnings (0.4%), the private workweek (34.5 hours) and unemployment (7.8%) are expected to add to the buoyant tone of Friday’s report.
Fundamental and technical factors point to solid job growth last month (see accompanying table). Indicative of a slower pace “pink slipping”, the average number of persons filing new claims for unemployment insurance remained on a downtrend over the five weeks heading into the February survey period, retreating to a five-year low of 355,600. Consistent with unemployed workers finding jobs, regular state benefit recipients contracted by 101,000 between canvasses to 3.074 million – the lowest tally since June 2008. On the technical side, population- weighted heating degree days were just marginally above normal in February, supporting our view that weather conditions will have little impact on the February report.
We will have full coverage of the February jobs report Friday morning, including the full report at 8:30 AM ET. Click here to follow the release LIVE on Business Insider >
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