​​February 2025 non-farm payrolls (NFP) preview: what to expect​

What is the February 2025 jobs report forecast?

​Economists are anticipating an increase of approximately 170,000 jobs in February, a notable improvement from January's 143,000 figure. This moderate growth forecast comes despite several headwinds facing the US economy, including recent federal workforce reductions and changing trade dynamics.

​The unemployment rate is expected to hold steady at 4.0%, continuing a period of relative stability in this key metric. While not at the historic lows seen in previous years, this figure suggests the labour market remains relatively healthy despite ongoing economic adjustments.

​Recent private payroll data has shown some weakness, with only 77,000 jobs added according to the latest figures. This deceleration from previous months could potentially signal that the official non-farm payrolls (NFP) figure might come in below the consensus forecast.

​Key factors influencing the February jobs report

​The Department of Government Efficiency (DOGE) initiatives are expected to reduce federal workforce numbers by approximately 10,000 positions. However, due to the timing of these layoffs, their full impact may not be reflected in the February data and could instead influence future reports.

​Trade policies implemented by the Trump administration, particularly new tariffs on imports from Mexico, Canada, and China, are creating both challenges and opportunities across various sectors. These measures could affect hiring decisions as businesses adapt to changing cost structures and supply chains.

​The services sector has shown resilience, with the Institute for Supply Management's nonmanufacturing purchasing managers index (PMI) rising to 53.5 in February from 52.8 in January. This expansion suggests continued strength in domestic demand, which could support employment growth.

​Weather conditions across the US in February were generally milder than average, which typically supports construction and other outdoor employment. This seasonal factor could provide a small boost to the headline figure if it allowed more outdoor work than is typical for February.

Potential market reactions to the jobs report

​A stronger-than-expected jobs report could prompt renewed selling in bond markets, pushing yields higher as investors price in a reduced likelihood of aggressive Federal Reserve rate cuts. This would likely follow through to movements in the forex space, potentially strengthening the dollar.

​Equity markets have shown sensitivity to employment data in recent months, often reacting negatively to strong reports due to implications for monetary policy. A report showing robust job creation above 200,000 might paradoxically lead to market weakness as rate cut expectations are pushed further out.

​Conversely, a significant miss on the headline number could fuel concerns about economic weakness, potentially triggering a flight to safety. In this scenario, investors might move away from cyclical sectors towards defensive areas of the market.

​For traders looking to position themselves ahead of the release, the underlying volatility highlights the importance of risk management. Setting appropriate stop losses and considering trading alerts can help navigate the potential market turbulence.

Implications for Federal Reserve policy

​The Federal Reserve (Fed) will be scrutinising the jobs data carefully, with particular attention to wage growth figures. Current projections suggest average hourly earnings will have risen by 0.3% month-on-month (MoM), maintaining the moderate pace seen in recent reports.

​Fed officials have recently emphasised the importance of the labour market in their decision-making process. A report showing unexpected strength or weakness could significantly influence the trajectory of interest rates for the remainder of 2025.

​Markets are currently pricing in the potential for rate cuts later in the year, but the timing remains uncertain. A weaker jobs report might accelerate expectations for monetary easing, while robust numbers could push back the anticipated timeline.

​The interplay between employment data and inflation metrics remains crucial for policy decisions. With recent trade policies potentially adding to inflationary pressures, the Fed faces a delicate balancing act between supporting employment and containing price increases.

Sectoral trends to watch in the report

​Manufacturing employment warrants particular attention due to the sector's sensitivity to trade policies. Recent tariffs could accelerate reshoring efforts, potentially boosting domestic manufacturing jobs, though such effects might take time to materialise fully.

​Retail employment figures will provide insights into consumer spending patterns. The sector has been undergoing significant structural changes, with the continued shift to e-commerce affecting traditional retail jobs while creating opportunities in logistics and fulfilment.

​Healthcare employment has been a consistent source of job growth and is expected to continue expanding regardless of broader economic conditions. The aging population and ongoing healthcare needs ensure relatively steady demand for workers in this sector.

​Technology sector hiring remains robust despite occasional headlines about layoffs at high-profile companies. The continued push for digital transformation across industries supports ongoing demand for skilled technology workers, though growth rates may be moderating.

How to trade the February jobs report

​Research market expectations thoroughly before the release. Understanding the consensus forecasts and recent trends will help you identify whether the actual numbers represent a significant deviation that might trigger market movements.

​Consider which markets might be most affected by the jobs data. The most direct impacts are typically seen in US indices, Treasury yields, and the dollar, but ripple effects can extend to commodities and global equities.

​Open an account with us if you don't already have one. Our platforms provide access to a wide range of markets that may be affected by the NFP release, allowing you to implement various trading strategies.

​Manage your risk appropriately by setting stop losses and not overcommitting capital to a single trade. The volatility following economic releases can be significant, making prudent risk management essential.

Economic context surrounding the February report

​The February jobs report comes amid broader economic adjustments following the 2024 election. Policy shifts under the new administration are beginning to influence various sectors, creating both challenges and opportunities that will likely be reflected in employment patterns.

​Recent gross domestic product (GDP) data suggests the US economy is growing at a moderate pace, supporting continued job creation. However, regional and sectoral disparities remain pronounced, with some areas showing stronger growth than others.

​Consumer sentiment measures have remained relatively stable, suggesting households are adapting to the current economic environment. This resilience in consumer attitudes provides some support for service sector employment, which remains a key driver of overall job growth.

​The global economic context adds another layer of complexity, with varying growth rates across major economies. These international dynamics influence US employment through trade relationships, supply chains, and business confidence, all factors that will shape the February data.

​The upcoming February 2025 jobs report arrives at a crucial juncture for markets and policymakers alike. With trading signals suggesting investor caution ahead of the release, the data will provide important insights into how the US economy is navigating current challenges. While moderate job growth is expected, the details within the report may prove more significant than the headline figures in determining market reactions and policy implications.