On Friday, March 9th 2018, the United States (US) Department of Labour will publish data regarding the US Non-Farm Payrolls, average hourly earnings and the country’s unemployment rate in February 2018. The upcoming data release is one of the most important coming from the US each month since it gives a clear picture of the country’s labour market.
Non-Farm Payrolls represent the number of new jobs added to the US economy in the past month in all non-agricultural business. New farm employees are excluded due to the seasonality of their profession. Non-Farm Payrolls are regarded as an important indicator of economic conditions because they move closely in line with the overall economy.
Non-Farm Payrolls February 2018 estimates
A survey conducted by Wall Street Journal (WSJ) and published on Monday March 8th 2018 showed that the majority of economists polled expect that 205,000 new jobs have been added to the US economy during February 2018. In January 2018, the release of data regarding Non-Farm Payrolls had surprised economists in a positive way, as the US economy had added 200,000 new jobs. The figure had surpassed analysts’ expectations who were anticipating that the number would hover around 180,000. If the Non-Farm Payrolls figure in February 2018 is in line or higher than analysts’ expectations, the US Dollar could strengthen against its major competitors. If the figure is lower than anticipated, the US Dollar will likely lose value.
February 2018 unemployment rate and average earnings forecast
Market analysts also anticipate a drop in the unemployment rate in February 2018 to 4.0% compared to January’s 2018 4.1% reading. Average weekly earnings are expected to have risen by 0.2% on a month-to-month basis and by 2.8% on an annualized basis in February 2018. Both figures are a tick lower than the 0.3% and 2.9% recorded respectively in January 2018. It should be noted that the 2.9% year-to-year wage increase in January 2018 was the highest recorded since 2009.
Better than expected figures regarding Non-Farm Payrolls, salaries and the unemployment rate in February 2018 will increase the chances of the Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed) in raising its benchmark interest rate in its upcoming March 2018 meeting. According to a CNBC report, published on February 22nd 2018, Goldman Sachs increased the probability of an interest rate hike by the US Federal Reserve in March 2018 to 95%. On March 7th 2018, the CME (Chicago Mercantile Exchange) Group’s Fedwatch Tool gave an 86% probability that the Fed will raise borrowing costs in its March 2018 meeting.
US President Donald Trump proposes tariffs on imports
US President Donald Trump announced on March 1st 2018 that the US administration is planning to impose tariffs on imported metals for a long period of time. More specifically, the US President said, during a meeting with representatives from the metal industry, that a 25% tariff should be imposed on steel imports and a 10% one on imported aluminum. US President Donald Trump said that the US aluminum and steel industries have had problems in the past due to unfair trade policies and assured the industries’ representatives that his administration will protect domestic businesses.
The President of the European Commission (EC), Jean Claude Juncker, said on Saturday 3rd March 2018 that the European Union (EU) needs to take measures to respond to the proposed US trade policies. Cecilia Malstrom, the EU’s commissioner for trade, told reporters on Wednesday 7th March 2018 that the EU has already prepared a provisional list of US products that could see higher tariffs, in case the US administration proceeds with its plans. Cecilia Malstrom noted that “the motivation of the US is an economic safeguard in disguise”, adding that the EU would take the case to the World Trade Organisation (WTO). As a result of investors’ worries about a potential trade conflict between the US its trade partners, the US Dollar to Euro exchange rate was set at €0.80 on March 7th 2018, almost 2 cents lower than the rate recorded on March 1st 2018 when President Donald Trump announced his intentions.
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