US NFP Prep (Friday 3rd April)
On Friday April 3rd at 08:30 ET, the BLS releases the US Employment Situation Report for March, including Nonfarm Payrolls, the Unemployment Rate, and Average Earnings.
Here are some views on what to expect.
General Expectations
Forecasts and ranges subject to change
Nonfarm Payrolls – Forecast: 65k | Prior: -92k | Range: 151k / -16k
Unemployment Rate – Forecast: 4.4% | Prior: 4.4% | Range: 4.5% / 4.3%
Average Earnings YoY – Forecast: 3.7% | Prior: 3.8% | Range: 3.9% / 3.5%
What to Expect
US Stocks
A stronger-than-expected report, solid job gains, stable or lower unemployment, and firm wage growth, could support equities by reinforcing confidence in economic resilience and earnings growth.
A weaker-than-expected outcome may weigh on stocks, particularly cyclical and consumer-sensitive sectors, as it signals slowing demand and softer income growth.
US Dollar
A robust jobs report typically supports the dollar, as it reduces expectations for near-term Federal Reserve easing.
A soft report may pressure the dollar, with markets pricing in slower growth and a more dovish policy outlook.
US Government Bond Yields
Upside surprises in payrolls or wages could push yields higher, reflecting firmer growth and inflation expectations.
Downside surprises generally lead to lower yields, as investors anticipate slower activity and increased odds of rate cuts.
Federal Reserve Policy
A firm labour report would reduce pressure on the Fed to cut rates, supporting a patient or higher-for-longer stance.
A weak report, particularly rising unemployment or slowing wage growth, strengthens the case for a more accommodative policy path as labour-market slack builds.
Commentary
MUFG
Employment growth has been volatile at the start of this year but the underlying trend remains weak. Private employment growth has averaged only around 30k/month over the last three to six months. The energy price shock triggered by the Middle East conflict could make businesses even more uncertain over the economic outlook, and dampen hiring intentions. Further evidence of weak US labour market conditions would reinforce expectations that the Fed will be reluctant to raise rates in response to the near-term inflation risks.
Wells Fargo
The labor market remains in a delicate position.
Payrolls unexpectedly declined in February and prior months’ data were again revised meaningfully lower.
While strikes and poor weather played a role in February, the ease with which these idiosyncratic factors tipped job growth into negative territory underscores its weak underlying momentum.
Renewed uncertainty amid the conflict in the Middle East and optimism around the productivity‑enhancing potential of AI are poised to keep demand for new workers tepid.
We now expect nonfarm employment to rise at a roughly 40K monthly average pace this year, down from about 70K previously.
The more modest hiring pace is likely to push the unemployment rate up to 4.5% in Q2 and Q3, remaining uncomfortably above most Fed officials’ definition of “full employment.”
Goldman Sachs
In a note to clients on Thursday, a team of economists at the bank said they anticipate higher unemployment and slower job growth through the end of the year as the impact of higher oil prices ripples across the US economy. In the bank’s baseline scenario, the oil price shock could shave off around 10,000 new jobs a month through the end of the year, even after accounting for expected job gains in the energy sector.
While higher oil prices have historically led to new jobs in the energy sector, those gains could be more muted this time around, given how the oil extraction business has become more efficient in recent years, Goldman said.
Previous Release
US Nonfarm Payrolls Actual -92k (Forecast 55k, Previous 130k, Revised 126K)
US Unemployment Rate Actual 4.4% (Forecast 4.3%, Previous 4.3%)
US Average Earnings YoY Actual 3.8% (Forecast 3.7%, Previous 3.7%)
US job growth unexpectedly turned negative in February, with payrolls falling by 92,000 against expectations for modest gains. The unemployment rate ticked up slightly to 4.4%, while wage growth remained firm, with average hourly earnings rising 3.8% year over year. Revisions to prior months also showed slightly weaker momentum, reinforcing the picture of a cooling labor market.
Looking beneath the headline decline, some of the weakness reflected temporary factors. Employment in healthcare fell due to strike activity, while job losses continued in the information sector and federal government. Elsewhere, the labor market showed signs of stability, with participation and the average workweek largely unchanged and part-time employment for economic reasons declining.
Markets reacted by leaning more heavily toward a softer policy outlook. US assets broadly weakened, with the dollar and Treasury yields falling more sharply than equities, as traders increased expectations that the Federal Reserve may need to deliver additional rate cuts this year.
