10 March 2025
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Nonfarm payrolls in the US improve in February

Daily Outlook - 10 March 2025

By Edward Bell

Nonfarm payrolls in the US rose by 151k in February, an improvement on the downward revised level of 125k for January but missing expectations for jobs growth of 160-170k. Job gains were balanced with 34k added in goods producing industries while services jobs growth rose by 106k. Government jobs growth was positive but most of the gains came from state and local administrations. The effect of the DOGE employment cuts will likely become more apparent in coming months.

The unemployment rate ticked marginally higher to 4.1% in February from 4.0% a month earlier while average hourly earnings slowed to 0.3% m/m from 0.4% in January. Overall the employment report was positive but gives more evidence of an economy shifting to a moderate pace. Fed chair Jerome Powell said that the US economy was “in good shape” in comments after the release of the jobs data and reiterated that the Fed wasn’t in a “hurry” to cut rates.

Saudi Arabia’s Q4 GDP growth was revised up to 4.5% y/y on the final reading, up from 4.4% on the preliminary print, making it the strongest annual growth rate in two years. Annual growth was confirmed at 1.3% with 4.3% growth in the non-oil economy and 2.6% in government services, while oil GDP contracted by 4.5%. The strongest growth in 2024 was in wholesale & retail trade, restaurants & hotels which expanded by 6.4%, followed by finance, insurance & business services (5.7%) and utilities (4.9%). In nominal terms the economy grew to SAR 4,070bn (USD 1,084bn). The crude petroleum & natural gas sector remained the largest component at 22.3%, followed by government services (16.2%).

CPI inflation in China dropped back into deflation in February, declining by 0.7% y/y. The February level was the first negative print in the CPI since January last year though consumer prices have hardly been a sign of robust activity in China’s economy. The drop in prices for February likely reflected high spending in the previous year as February generally coincides with public holidays in China. Producer price inflation declined by 2.2% y/y in February, remaining in negative levels since September 2022.

Today’s Economic Data and Events

  • 11:00 GE industrial production m/m Jan: forecast 1.5%
  • 11:00 TU industrial production m/m Jan

Fixed Income

  • US Treasuries sold off late on Friday after largely absorbing the nonfarm payrolls report with no reaction. Yields on the 2yr UST ended the day up 4bps at 3.9997% while the 10yr yield added 2bps to 4.3011% following comments from Fed chair Jerome Powell stressing the health of the US economy. At the same time markets are pricing in more rate cuts this year than they had only a few weeks ago with nearly three 25bps cuts priced in by the end of 2025.
  • GCC credit had a positive close to the week with a broad index of regional debt up by 0.3%. Sovereign and corporate bonds closed the day higher while there were gains across all country-level sub indexes.
  • Fitch affirmed their ‘AA-‘ rating on Kuwait with a stable outlook while S&P affirmed their ‘BB-‘ rating on Jordan, also with a stable outlook.

FX

  • Currency markets last week were all about the turnaround in the level of the Euro which recorded one of its strongest weekly gains in years. The single currency rose by 4.4% last week, including at 0.5% gain on Friday alone to settle at 1.0833 as markets responded enthusiastically to expectations of more defence and infrastructure spending from Germany. A less dovish outlook from the ECB also helped to spur the Euro higher.
  • While the weakness in the US dollar was most concentrated against the Euro most currencies rallied last week with GBPUSD closing the week at 1.2920, up 2.7% on the week and 0.3% on Friday alone. USDJPY fell 1.7% last week to close at 148.04.
  • Commodity currencies paired some of their gains at the end of the week with USDCAD higher by 0.5% to 1.4372 though the Loonie still managed a 0.6% gain for the week as a whole. Both AUD and NZD ended Friday lower by 0.4% at 0.6305 and 0.571 respectively but with weekly gains of 1.6% and 2% for the Aussie and Kiwi.

Equities

  • US equity markets managed to stem some losses at the end of the week with both the Dow Jones and S&P 500 up 0.5% on Friday while the NASDAQ added 0.7%.
  • European markets turned lower in the final session of the week with a 0.9% drop in the Euro Stoxx 50 while the FTSE closed flat.
  • Local stocks had a soft close on Friday with the DFM down by nearly 1% and the ADX lower by 1.2%.

Commodities

  • Oil prices recovered some ground on Friday with Brent front month futures up 1.3% at USD 70.36/b while WTI added 1% to close at USD 67.04/b. However, both remain in a downtrend with Brent having declined three weeks in a row and WTI falling seven consecutive weeks.
  • Metals prices had a mixed session on Friday with gold, silver and platinum lower while in the industrial space aluminium and iron ore were modestly higher while copper fell.

Written By

Edward Bell Acting Group Head of Research and Chief Economist


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