US non-farm payrolls likely grew in February, labor market to remain strong

US non-farm payrolls in February are likely to have grown by 230k, as compared with 151k jobs generated in January and consistent with 2015's average job growth of 228k per month. The positive projection is based on the jobless claims. In the four weeks leading up the February survey week, initial claims averaged at 273k, as compared with the average of 282k in the prior period. Continuing claims have grown moderately in 2016, as compared to the lows of October/November; however, they were particularly unchanged between the January and February.

Other indicators direct towards strong labor demand. The rate of job openings accelerated to 3.8% in December from 3.6%, putting it back at the cyclical peak recoded in July. Furthermore, the rate of quitting grew to 2.1% in December, the month that recorded a new cyclical high and which implies rising sentiment in the strength of labor market.

The jobless rate is likely to remain stable at 4.9%. The unrounded reading for January was 4.921%. It will take around two months for the rate to decline to 4.8% with the current rate of job creation. According to FOMC, the jobless rate will moderately undershoot the longer-run neutral rate of 4.9% and then level off at about 4.7%. Recent wage trends confirm the opinion that labor market has reached full employment. The hourly average earnings growth rate on a year-on-year basis rose to 2.5% from 2%.

"Although we look for further gains this year, the timing of the February survey week is likely to suppress the reported wage growth for that month. We look for a 0.1% gain mom which would push the yoy growth rate back to 2.4%", says Societe Generale.