*

February jobs report due on March 7, increase of 133,000

jobs

expected

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Weakening US consumer, business indicators signal caution

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Investors assessing fallout from Trump plans to shrink

federal

workforce

By Lewis Krauskopf

Feb 28 (Reuters) - The stakes are high for the monthly

U.S. jobs report in the coming week, as investors gauge whether

a string of worrisome data is signaling significant concern

about the economy.

The benchmark S&P 500 stock index has pulled back 4%

from its all-time high reached earlier this month, while falling

Treasury yields and a slide in bitcoin are also indicating

increasing investor wariness.

A number of recent economic releases have disappointed or

weakened, including consumer confidence, business activity and

retail sales. The Trump administration's dramatic moves on trade

and other policies have injected uncertainty for consumers and

businesses.

The monthly employment release is seen as among the most

crucial data points assessing the economy's health and investors

will be looking for the jobs data for February, due on March 7,

to either bring relief or drive further worry.

"The market is on edge because of fears regarding a U.S.

economic growth scare," Michael Arone, chief investment

strategist for the U.S. SPDR Business at State Street Global

Advisors. "If the unemployment figure shows signs of weakness,

it further fuels the flames for that growth scare."

Employment in February is estimated to have increased by

133,000 jobs, according to a Reuters poll, compared to 143,000

in added jobs in January. The unemployment rate is expected to

be 4.0%.

"The jobs market is the most important pillar of the U.S.

economy," said Matthew Miskin, co-chief investment strategist

at John Hancock Investment Management. "Whether the consumer is

in too much debt or whether they're going to spend is really

going to come down to whether or not they have a job and they

feel comfortable in their job."

Despite concerns about economic weakening, investors remain

on guard about inflation, with the annual pace of inflation

still running above the Federal Reserve's 2% target, so an

overly strong jobs report also could spark market concerns.

"The street is hoping for a number that's not going to be

too cool, too negative relative to expectations, or too hot,

meaning that ... inflation might take longer than expected to

normalize," said Angelo Kourkafas, senior investment strategist

at Edward Jones.

In a possible silver lining for stocks, investors expect

more monetary policy easing than they did earlier this month

following the recent disappointing economic reports. Fed funds

data indicate at least two more interest rate cuts expected by

December, according to LSEG.

The jobs data comes as Trump takes dramatic action to shrink

the federal workforce, with the administration on Wednesday

ordering agencies to undertake more large-scale layoffs. Tens of

thousands of U.S. government workers have been fired in recent

weeks, according to a Reuters tally of announcements tracking

Trump's plans.

With federal employees and contractors worrying about their

jobs, "the risks are rising that households may begin to hold

back purchases," said Torsten Slok, chief economist at Apollo

Global Management.

"We remain bullish on the economic outlook, but we are very

carefully watching the incoming data for signs if this is an

inflection point for the business cycle," Slok said in a note on

Thursday.

Data on manufacturing and the services sector are due in the

coming week, when several Fed officials are set to speak and

give their views on the economy.

Investors remain mindful of market volatility stemming from

further announcements from Trump on tariffs and other policies.

The president on Wednesday raised hopes for another pause on

steep tariffs on imports from Mexico and Canada, while floating

a tariff on European cars and other goods.

"Yesterday was another example of how the words from the

White House or the President can shake things up on any given

day," Matthew Maley, chief market strategist at Miller Tabak,

said in a note on Thursday.

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