LIVE MARKETS-DOGE to have limited impact on February payrolls

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DOGE TO HAVE LIMITED IMPACT ON FEBRUARY PAYROLLS

North American economist Bradley Saunders at Capital Economics writes that the hiring freeze, buyout offers, and mass firings in the federal government should have limited impact on the U.S. nonfarm payrolls for February due out next week.

He notes that the impact from the hiring freeze is likely to be minimal given that there are numerous exemptions to the policy.

"The number of staff who leave the federal workforce each month – which would constitute the net impact on federal employment in the event of a complete hiring freeze – tends to be small, and many of those who do leave start new jobs straight away and therefore do not count as unemployed anyway."

Second, Saunders points out that the 77,000 employees who accepted a "deferred resignation" package will continue to be paid until the end of September and therefore will still be counted on the federal payroll until then.

And third, the widespread layoffs of up to 220,000 junior staff only began in earnest last week and will fall outside of the February survey period.

That said, Saunders writes that timely survey indicators point to February as being a weak month for payrolls growth, compared to the previous month.

He adds that the S&P composite employment index also dropped below the 50 "no change" mark for the first time in three months, while the NFIB hiring intentions indicator slipped last month.

However, he expects employment in weather-sensitive sectors to have recovered as staff returned to work following the polar vortex. Saunders is forecasting a 170,000-gain in non-farm payrolls in February. The Reuters forecast, meanwhile, is for the economy to create 133,000 new jobs.

BofA Securities economists also expect little DOGE impact on jobs.

"Given the muted claims data in the survey week, we do not expect DOGE driven job cuts to be a sizable drag on Feb data. Although, the colder than average weather could pose some downside risks."

(Gertrude Chavez-Dreyfuss)

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