The ranges of estimates are important in terms of market reaction because when the actual data deviates from the expectations, it creates a surprise effect. Another important input in market’s reaction is the distribution of forecasts.
In fact, although we can have a range of estimates, most forecasts might be clustered on the upper bound of the range, so even if the data comes out inside the range of estimates but on the lower bound of the range, it can still create a surprise effect.
Non-Farm Payrolls
- -9K to 125K range of estimates
- 40K-75K range most clustered
- 59K consensus
Unemployment Rate
- 4.4% (36%)
- 4.3% (58%) – consensus
- 4.2% (6%)
Average Hourly Earnings Y/Y
- 3.7% (85%) – consensus
- 3.6% (12%)
- 3.5% (3%)
Average Hourly Earnings M/M
- 0.4% (5%)
- 0.3% (85%) – consensus
- 0.2% (7%)
- 0.1% (3%)
Average Weekly Hours
- 34.4 (3%)
- 34.3 (77%) – consensus
- 34.2 (20%)
The focus is going to be mainly on the Unemployment Rate. We can see that the expectations are skewed to the upside, so a 4.2% print would be a hawkish surprise. Fed’s Waller mentioned that he might change his mind on rate cuts if the strong January data is repeated in February.
The February jobs data so far has been all positive. The employment index in the ISM Manufacturing PMI improved to 48.8 vs 48.1 prior, the one in the ISM Services PMI jumped to 51.8 vs 50.3 prior. The Initial Jobless claims during the survey week were 208K, while Continuing Claims were 1822K (the lowest since September 2024). Lastly, the ADP beat expectations coming in at 63K vs 50K expected and 22K prior.
