February NFP – What to Expect?

Posted by James Hughes -

It’s that time of the month again when we look towards February NFP. Last month saw a bumper figure of 225,000 new jobs created in January. That was good news for an economy which has continued to show that the jobs market is flying.

This month expectations are for the Non-Farm Payroll to show a gain of 175,000 new jobs. Yet as always, it could be the average hourly earnings which will might to move the markets. Expectations for the average hourly earnings are for no change from last month. However, the continued strength in wages and jobs will be one headache the Fed and the government can stop worrying about for now.

Coronavirus Is a Problem

The outbreak of Coronavirus continues to be the dominating force for these markets. Even with the NFP data of the month coming out today, it’s unlikely that figures will stir anything. The outbreak of Covid-19 continues to be the biggest talking point.

In a move to prepare for Coronavirus escalation, the Fed cut rates by 50 basis points in an emergency measure. This is the first time the Fed has acted outside of their regular meetings since the 2008 financial crisis.

February NFP Expectations

We can often get an idea of the NFP number by looking at the ADP number (released on Wednesday). While the correlation between both of these numbers is particularly unreliable, it’s interesting that this Wednesday the ADP release showed a considerable revision in the figure from January. When considering the correlation, a correction to last month’s NFP reading could be on the cards. 225k reading was one of the largest seen in several months. A revision could be something which upsets the balance when it comes to analysing this month figures.

US markets will take the full brunt of any figure that comes away from expectation on Friday. We are looking towards the US dollar and US stock markets. However, with the outbreak of Coronavirus still the fresh talking point for many traders, it could be that any reaction to this month’s figures could be muted as investors remain worried of any new stories developing over the weekend. Fresh headlines which could see markets open away from their closing levels on Monday morning.

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