Goldman Sachs: February NFP Preview
Goldman Sachs estimates that nonfarm payrolls (NFP) increased by 170,000 in February, slightly above the +160,000 consensus but below the three-month average of +237,000.
Key Takeaways:
Job growth remains firm, supported by recovery hiring and recent immigration trends.
Federal workforce reductions expected to exert a limited drag of 10,000 jobs.
Winter weather impact is neutral after weighing on January payrolls by -60,000 jobs.
Wages & Unemployment
Average hourly earnings expected to cool to +0.3% M/M (vs. +0.5% in January).
Y/Y wage growth remains at 4.0%, with potential for 4.2% due to base effects.
Unemployment rate expected to hold at 4.0%, near an eight-month low.
Household survey employment: +234,000 increase
Labor force growth: +91,000 increase
FOMC projected 4.3% unemployment in 2025
Investors will focus on government payrolls, as hiring freezes, contract buyouts, and mass layoffs take effect.
Challenger reported 62,242 federal job cuts in January, bringing YTD cuts to 62,530—a staggering 41,311% increase YoY.
Upside Risks: Potential for Stronger NFP
Recovery Hiring & Immigration
Continued hiring momentum from post-pandemic recovery and immigration surge.
Winter Weather Rebound
January -60,000 weather impact likely neutralized in February.
Colder-than-usual temperatures, but sequentially lower snowfall.
Expect job acceleration in construction & leisure/hospitality sectors.
Downside Risks: Potential for Weaker NFP
Federal Government Payrolls (-10,000 impact)
Workforce reductions include layoffs, a hiring freeze, and a deferred resignation program.
Unemployment insurance claims for federal workers remain low, suggesting minimal layoffs in February.
75,000 employees accepted deferred resignation offers but remain on payroll until September 30.
Hiring freeze will gradually reduce employment (gross federal hiring averaged 30,000 per month in the last six months).
Strikes (-5,000 impact)
BLS strike report indicates 5,000 striking workers affected payroll growth.
Neutral Factors: Mixed Signals from Data
Alternative Job Growth Measures
February big data indicators suggest an average pace of +142,000 jobs across tracked metrics.
Job Availability
JOLTS job openings fell 0.5M to 7.6M in December.
Conference Board job gap fell to +17.1, well below pre-pandemic levels.
Employer Surveys
Goldman Manufacturing Employment Index: -0.6 pts to 49.6.
Goldman Services Employment Index: +0.4 pts to 50.1.
Post-pandemic survey data has been unreliable, limiting its impact on forecasts.
Layoffs & Initial Claims
Initial jobless claims: 216K in February vs. 215K in January (no significant change).
JOLTS layoff rate: Unchanged at 1.1% (December).
Challenger layoffs: +94,000 in February to 131,000 (SA by GS).
Increase driven by federal government cuts (DOGE impact), not yet reflected in payrolls.
Market Reaction & Outlook
S&P 500 trades +1.65% as investors focus on clean data signals
Goldman’s Cullen Morgan: Market remains in a "good news is good news, bad news is bad news" mode.
Looking Ahead
February NFP expected to confirm a slowdown, not a labor market collapse.
DOGE-related federal job cuts may become a larger factor later in 2025.
Fed & investors will watch wage growth and unemployment trends closely.