Have federal firings slashed hiring? That is the main question in February’s Nonfarm Payrolls, which come on the backdrop of tariff-triggered markets.
Nonfarm Payrolls fears exceed calendar data
The economic calendar points to an increase of 160K jobs in February, similar to January’s data – but real expectations are lower. ADP’s private-sector labor data showed an increase of only 77K positions, already reducing estimates. Moreover, ADP only measures private-sector data, and there is fear that firings at the federal level via the Department of Government Efficiency (DOGE) have hurt the labor market further.
However, NFP surveys were held in the second week of February, probably failing to capture significant government layoffs. Therefore, there is room for an upside surprise in comparison to the downbeat expectations.
Investors have incurred substantial losses this week, following quick changes about tariffs, which were imposed but then partially temporarily withheld on Canada and Mexico. These may still arrive in April, and this uncertainty is a pain.
An upbeat NFP may trigger a temporary relief rally, but markets will remain worried. A weak figure would exacerbate fears.
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