by Calculated Risk on 4/04/2024 05:03:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for March. The consensus is for 200,000 jobs added, and for the unemployment rate to be unchanged at 3.9%.

There were 275,000 jobs added in February, and the unemployment rate was at 3.9%.

From Goldman Sachs economist Spencer Hill

We estimate nonfarm payrolls rose by 240k in March—above consensus ... We estimate that the unemployment rate fell one tenth to 3.8% ... We assume a flat-to-up labor force participation rate of 62.5%. We estimate average hourly earnings rose 0.25% month-over-month, which would lower the year-on-year rate by three tenths to 4.0%—somewhat below consensus.
emphasis added

From BofA:

In the March employment report, we forecast nonfarm payrolls to rise by 200k. Despite solid employment, we do not expect to see signs of an economy that is overheating. We think average hourly earnings likely rose by 0.3% m/m, or 4.1% y/y, and average weekly hours likely ticked higher to 34.4. Finally, we expect the unemployment rate to remain at 3.9% and for the participation rate to rise by one-tenth to 62.6%.

• ADP Report: The ADP employment report showed 184,000 private sector jobs were added in March.  This suggests job gains slightly above consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM services are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index increased in 47.4%, up from 45.9% the previous month.   This would suggest about 35,000 jobs lost in manufacturing. The ADP report indicated 1,000 manufacturing jobs added in March.

The ISM® services employment index decreased to 48.5%, from 8.0%.   This would suggest about 35,000 jobs added in the service sector. Combined this suggests few jobs added in March, far below consensus expectations.

• Unemployment Claims: The weekly claims report showed a larger number of initial unemployment claims during the reference week from 202,000 in February to 212,000 in March.  This suggests slightly more layoffs in March compared to February.

•  COVID: As far as the pandemic, the number of patients hospitalized during the reference week in March was around 10,000, down from 17,000 in February.  

• Conclusion: Based on the ISM surveys and weekly claims, my guess is employment gains will be below consensus expectations.