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 in March.
We probably need to see jobs growth below 100,000, a higher unemployment rate and no improvement in the weak earnings data in January before the FOMC members change their minds.
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.
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 unemployment remained flat at 4.8% and that average hourly earnings increased 0.3% m/m, implying a small increase in the wage growth rate of 2.8% y/y.
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