What to watch

Jobs report will be key data when Fed meets

The jobs report is always the economic highlight of the month, but next Friday’s release for February is more significant than usual, with its potential to cement, or possibly derail, a Federal Reserve rate hike in mid-March.

All signals are pointing to a second consecutive strong reading after the Labor Department recorded a much-better-than-expected 227,000 job gains in January.

Initial jobless claims, a good barometer of layoffs, have been running near four-decade lows. Hiring of temporary workers, which can foreshadow the addition of permanent staffers, generally has been solid. And an index of service-sector activity hit a 16month high in February, with a measure of employment showing faster growth, the Institute for Supply Management said Friday.

Economists expect Labor to report 185,000 job gains for the month, based on median estimates, but several top forecasters predict gains of more than 200,000.

One factor that could temper government payroll increases is President Trump’s federal hiring freeze. Andrew Hunter of Capital Economics says that means up to 25,000 public-sector job vacancies last month can’t be filled.

Also worth watching is annual wage growth, which unexpectedly slowed from 2.8% to 2.5% in January but is expected to rebound.

The bar for a Fed hike isn’t high. Economist Ian Shepherdson of Pantheon Macroeconomics says only a “disastrous” report would stay the Fed’s hand.