Key US jobs report preview - Nomura

Analysts at Nomura offered a preview for this week's key US employment report.

Key Quotes:

"Incoming data on the labor market suggest strong job gains in February. Data on sentiment, including the Empire State, Philly Fed and ISM manufacturing surveys, point to better hiring activity in February. Initial and continuing claims data continued to trend lower, implying that involuntary layoffs remain low and that firms are eager to retain workers. In particular, the 4-week moving average of initial jobless claims inched down further, reaching its lowest point in decades. Based on these positive readings, we forecast private nonfarm payrolls to have added 215k jobs in February.

Given the recent employment trend in the public sector, we expect public sector payrolls to remain unchanged. This implies that our forecast for total nonfarm payroll gains stands at 215k. In the manufacturing sector, we expect a healthy gain of 10k considering the heightened optimism of manufacturers. Moreover, we forecast the unemployment rate to inch down slightly to 4.7% (4.67% unrounded) in February from 4.8% (4.78%) in December.

We still expect more job seekers to rejoin the labor force, attracted by more favorable labor market conditions, but we think steady job creation should put some downward pressure on the unemployment rate. Lastly, we expect average hourly earnings to have increased by 0.3% m-o-m (2.7% y-o-y) following a weaker-than-expected 0.1% increase in the prior month.