Weather and port dispute are downside risks

Our econometric model indicates that non-farm payrolls increased by a slightly more modest 230,000 in February, down from an average monthly gain of 336,000 over the preceding three months. It is worth bearing in mind that those earlier gains were the fastest pace of job growth since 1997. Accordingly, rather than signalling any weakness in the economy that could push the Fed's first rate hike back into the second half of this year, a drop back to 230,000 should be viewed as a return to a more sustainable trend. It should still be sufficient to push the unemployment rate back down to 5.6%.