Last month, the US Nonfarm Payrolls report was a big disappointment for the most analysts and traders, showing a modest figure of 151K, instead of the forecasted 190-200K and above. This Friday's release will be especially interesting as traders again expect Nonfarm Payroll's growth though their forecasts are much modest this time.

Our Forecast

New data on the labor market in the US will be especially important for the forex market participants as this will be crucial information before the meeting of the US Fed on March 16.

There also will be released an important set of market data on March 15-16, but it is already clear about the trend and that data will not dramatically affect the overall picture of the state of the US economy if the new Nonfarm Payrolls shows positive figures.

The speeches of the US Fed members in the past two weeks show that the moods in the American regulator divided approximately equally: one-half of the members ready to vote for a rate increase at the meeting of March 16, the second considers that it is still necessary to postpone the increase until the strong inflation and inflation expectations data will be clearly indicated.

The current Nonfarm Payrolls report will be the key to strengthening the position of one of the two sides within the US Federal Reserve.

In case of strong NFP data with continued wage growth amid rising inflation in the US, the investors can expect a hawkish rhetoric of March 16 meeting, indicating the possibility of the rate increasing in April. If there will be weak data, pessimistic moods in US Fed continue to prevail and discussion on rate increasing will be most likely postponed for June.

The majority of analysts expect a strong NFP data with figures around 193K and with 0.2% wage growth.

What Do Others Think?

Reuters analysts say that “The US job market has performed well over the last few years, with the US unemployment rate now improving to 4.9%, and NFP averaging over 200k jobs created per month in the last 5 years, however, last month’s NFP of 151k was well below the forecast of 189K.

US economic data relating to its Manufacturing sector, which represents only 12% of the economy, suggests that this sector has been contracting for the last 4 months and may place pressure on the NFP number.

However, the US has a much larger Services sector, which continues to expand, but the rate of expansion is slowing. I would expect the US NFP to be very close to a forecast of 195K.”