Market Live: NFP Report

Economists expect non-farm payrolls to rise by around 60,000, while the unemployment rate is forecast to remain unchanged. Average hourly earnings are also expected to hold steady at 3.7% year-on-year, while private sector payrolls are projected to increase by 65,000, down sharply from the 170,000 recorded in January.

Recent leading indicators point to a moderate improvement in the US labour market. The ADP National Employment Report showed private payrolls rising 63,000 in February, beating expectations and marking the strongest reading since November.

Meanwhile, the ISM Services Employment Index rose to 51.8, its highest level in a year, while the ISM Manufacturing Employment Index also signalled improved hiring sentiment compared with January. Together, these indicators suggest the labour market may be gaining some momentum as the first quarter progresses.

Weather disruption and strikes could distort the data. However, there are several factors that could influence February’s figures. Severe winter storms across parts of the US at the end of January may have delayed hiring, potentially boosting February payrolls by as much as 25,000 jobs.

Strike activity could also have an impact. Around 5,000 workers were on strike last month, including roughly 1,000 employees at Starbucks who have been striking since November. This could weigh on the headline payroll figure.
Although geopolitical tensions in the Middle East have dominated market sentiment recently, the payrolls report could still drive volatility if the data significantly surprises expectations.

Historically, US Treasuries tend to show the strongest reaction to payroll surprises. A weaker-than-expected report could push Treasury prices higher and yields lower, while a stronger reading would likely send yields higher across the curve.

However, January’s stronger payroll figure did not trigger a major market reaction, partly because revisions distorted the data. When payrolls figures are viewed as less reliable, the market response tends to be limited and short-lived.

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