by Calculated Risk on 3/07/2024 05:16:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for February. The consensus is for 188,000 jobs added, and for the unemployment rate to be unchanged at 3.7%.

There were 353,000 jobs added in January, and the unemployment rate was at 3.7%.

From Goldman Sachs economist Spencer Hill

We estimate nonfarm payrolls rose by 215k in February—somewhat above consensus of +200k but well below the +353k pace in January. We believe fewer end-of-year layoffs produced last month’s temporary spike, and with the seasonal layoff period now behind us, we assume a return towards a more normal pace of job gains. That said, our forecast also reflects a 30-50k weather boost from workers returning after the mid-January storms. ... We estimate that the unemployment rate was unchanged at 3.7%

• ADP Report: The ADP employment report showed 140,000 private sector jobs were added in February.  This suggests job gains slightly below consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM services are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index decreased in February to 45.9%, down from 47.1% last month.   This would suggest about 40,000 jobs lost in manufacturing. The ADP report indicated 6,000 manufacturing jobs added in February.

The ISM® services employment index decreased to 48.0%, from 50.5%.   This would suggest about 20,000 jobs added in the service sector. Combined this suggests job losses of 20,000 in February, far below consensus expectations.

• Unemployment Claims: The weekly claims report showed a larger number of initial unemployment claims during the reference week from 189,000 in January to 202,000 in February.  This suggests slightly more layoffs in February compared to January.

•  COVID: As far as the pandemic, the number of patients hospitalized during the reference week in February was around 17,000, down from 28,000 in January.  

• Conclusion: Weather was favorable, but my guess is the headline number will be below consensus expectations.