Friday’s non-farm payrolls (NFP) report will round off an already volatile week for markets, potentially providing early indications of how President Donald Trump’s tariff policies are influencing hiring decisions in early 2025.

Key Forecasts:

• Headline Jobs Figure: 156,000 (Previous: 143,000)
• Unemployment Rate: 4.0% (Unchanged)
• Average Hourly Earnings: Expected to rise 0.3% month-over-month
• Data Release Time: Friday at 13:30 GMT

Jobs Growth and Tariff Uncertainty

Economists expect the US economy to have added 160,000 jobs in February, an increase from the 143,000 jobs added in January. However, a weaker-than-expected number could signal that businesses are delaying hiring decisions until there is greater clarity on Trump’s economic policies.

Although tariffs on Mexican, Canadian, and Chinese goods officially took effect on Tuesday—before being temporarily suspended for Mexico and Canada—some employers may have already made adjustments in anticipation of these policy changes. The overall impact on hiring remains uncertain, but February’s report could provide the first glimpse into potential effects.

The unemployment rate is forecasted to remain steady at 4.0%, reflecting continued stability in the labor market. Wage growth, a key indicator for inflation, is projected to increase by 0.3% month-over-month, a slight cooling from the previous 0.5% rise.

The DOGE Factor: Will It Affect This Report?

Meanwhile, Elon Musk’s DOGE program is unlikely to have significantly impacted this report, as most DOGE-related layoffs occurred after the reference period. However, future employment reports may reflect a more substantial effect.

In a note earlier this week, Deutsche Bank outlined its views on the matter: “We have tempered our headline forecast somewhat given the risk of federal government layoffs starting to show up. Though the four-week average for nationwide initial jobless claims for the February employment survey period was down slightly from the prior month, there was a notable pick-up in initial claims in Washington, DC, during the survey week.”

The bank estimated that around 15,000 federal jobs have been cut since the Trump administration took office, with another 12,000 layoffs pending due to ongoing court cases. “Hence, we would not be surprised to see a drop in federal government payrolls, though they may be more pronounced in the March data and beyond. Should our payroll forecasts end up close to the mark, we would expect the unemployment rate to edge up by a tenth to 4.1%.”

Legal Hurdles and Future Outlook

Barclays shared a similar view, highlighting the legal complexities surrounding DOGE-related dismissals: “It remains highly uncertain how many job cuts will ultimately take place, as a judge this week partially blocked the firings of probationary workers. Other legal attempts to stop DOGE could also prove successful.”

With labor markets at an inflection point, Friday’s NFP report will be closely watched by investors, policymakers, and businesses alike. Will hiring remain resilient, or will economic uncertainty weigh on job creation? Stay tuned for the official numbers at 13:30 GMT.