NFP Preview: We estimate an increase by 190K in February - Danske Bank

Analysts from Danske Bank, estimate that non-farm payrolls increased by 190K in February. The US official employment report will be released on Friday. 

Key Quotes: 

“The jobs report for February due on Friday seems to be the last thing which potentially could halt a Fed hike at the upcoming meeting. Preliminary labour market data for February have been solid, with low initial claims and Markit PMI employment index pointing to significant labour market progress.”

“We estimate non-farm payrolls increased by 190,000 in February in line with the recent trend and in line with the consensus. We estimate private services was the main contributor to job growth with 160,000 new jobs but we also expect the progress in manufacturing employment observed during the last two months continued in February, with an increase in manufacturing employment of 20,000 as manufacturing activity indicators continue to point towards progress.”

“As we expect the jobs report to be good, we expect the Fed to deliver. Markets have priced in an 85% probability of a Fed hike in March. We now expect the Fed to hike three times this year in March, July and December, as the Feb seems less worried about inflation and has increased its weighting on labour market and growth data. In her speech, Yellen hinted that four hikes this year means that monetary policy becomes neutral and we think the Fed wants to keep monetary policy slightly accommodative, as there is  still slack left in the labour market. We still expect the Fed to hike three-four times next year, as the neutral rate should move higher.”