US NFP likely to post gain of 185,000 in February - BNPP

Research Team at BNP Paribas suggests that in February, they expect goods-producing payrolls to have grown by 30,000, service-producing payrolls to have risen by 152,000 and the government sector to have added 3,000 jobs, implying a total non-farm payroll gain of 185,000.

Key Quotes

“This is roughly in line with January’s 3, 6, and 12-month moving averages of 183,000, 183,000 and 195,000, respectively.”

“The unemployment rate moved up 0.06pp in January to 4.8% after hitting a cycle low of 4.6% in November 2016. In February we expect it to have moved down 0.1pp to 4.7%. This assumes a flat participation rate (62.9%) following a 0.2pp increase in January.”

“Payrolls surprised to the upside in January, with firms adding 227,000 jobs to the economy, about 47,000 more than the consensus anticipated. Estimates over the previous two months were revised down by 39,000, however, effectively offsetting most of the upside surprise.”

“A key driver of January’s surprise was strong hiring in the construction sector (36,000 jobs). Given another month of unseasonably warm weather, we are estimating another solid month of hiring in this sector – about 20,000 – although the heavy rains in California in February have created some downside risk to this forecast. California accounts for about 8% of total private housing starts and about 11% of total construction employment.”

“Hiring in the retail sector was also strong in January, compared to its recent trend (46,000 compared with a 12-month moving average of 19,100). We think retail hiring will have been solid again in February, but probably more moderate than January. In particular, we would expect some retreat in furniture and clothing-store hiring, which has surged recently.”