10Y dollar jobs NFP unemployment

Jobs Report Misses Bigly, AHE Inline

U.S. March Nonfarm Payrolls Rose 103k; Unemp. Rate at 4.1%

The latest salvo in the trade “skirmish” (Larry Kudlow and Wilbur Ross would prefer it if you didn’t use the term “war” just yet) has raised the stakes for March payrolls, the last hurdle for markets in a truly wild week that began with the worst start to a Q2 in 89 years and subsequently saw equities rebound stateside as investors bought dips on the assumption that eventually, cooler heads will prevail.

Powell speaks today on the economic outlook as well, so I suppose that has the potential to drive markets in the absence of payrolls fireworks and/or Trump Twitter broadsides.

Inflation jitters have subsided meaningfully since the February scare engendered by the above-consensus AHE print that accompanied the January jobs report and everyone will be hoping for a repeat of February’s “Goldilocks” payrolls – that is, it would be “tremendous” if we could manage another headline beat paired with a modest miss on AHE. The disaster scenario is a headline miss and an AHE beat especially in light of (another) overnight trade escalation.


10Y yields have ticked back up to 2.82 after falling to a 2-month low amid risk off sentiment tied to the tech plunge. The dollar will also be looking for direction from the data.


Here’s what Goldman was expecting:

Nonfarm payroll: GS +200k, consensus +189k, last +313k. We estimate nonfarm payrolls increased 200k in March following a 313k gain in February. Our forecast reflects strong labor market fundamentals partially offset by a sizeable drag from weather, as snowfall was above-average in the first half of March. If realized, our forecast would represent a significant acceleration in underlying job growth from the 180k trend in the second half of 2017. We estimate the unemployment rate declined by one tenth to 4.0% (from 4.14% previously), as continuing claims resumed their downtrend between the survey reference periods. Additionally, surges in labor force participation as large as that seen last month (+0.3pp) are typically associated with a subsequent decline in the jobless rate.

Goldman also notes the following with regard to AHE:

We estimate average hourly earnings increased 0.3% month over month, reflecting somewhat favorable calendar effects (the survey week ended on the 17th). We also note that last month’s month-over-month increase (+0.15%) was dragged down by a sharper-than-usual drop among supervisory employees, a relatively mean-reverting subset (in contrast, production and nonsupervisory average hourly earnings increased 0.27%). Additionally, to the extent that the increase in the February workweek (+0.1 to 34.5 hours) weighed on wage growth, this would suggest scope for mean-reversion in March (the workweek is now at a 2-year high). Taken together, we estimate a 0.3% month-over-month gain that pushes up the year-over-year rate a tenth to 2.7%.

Here’s BNP’s take:

The March employment report highlights US data next week. The February report showed an outsized 313,000 jobs added for the month, with particularly strong hiring in retail, manufacturing, and construction, in addition to a 54,000-job upward revision to the previous two months. However, a 0.3pp rise in the labour force participation rate held the unemployment rate steady at 4.1%, while average hourly earnings growth slowed to 0.1% m/m after averaging 0.3% m/m the prior three months. For March, we expect 170,000 jobs to have been added, driven by relative slowdowns in the above sectors and the month of March having a historical record of underperforming trend. Despite a softer anticipated number of jobs added, we project the unemployment rate to decline 0.2pp to 3.9%, on account of our expectations for a decline in the participation rate. Since about 2014, the participation rate has remained relatively bounded between 62.7% and 63.0%. We interpreted last month’s bounce to 63.0% as largely noise, and expect it to follow past behaviour and tick back down in March. On the wages front, we expect a moderate rebound in average hourly wage growth to 0.2% m/m, which should bump the year-on-year rate 0.1pp to 2.7%. We continue to expect a steady pickup in wage growth to leave average hourly earnings up 3.1% by year-end.

Barclays was at 200k, 4.0% on the unemployment rate and 2.8% y/y on AHE, going in for whatever that’s worth.

Without further ado…

Estimates and priors:

  • Change in Nonfarm Payrolls, est. 185,000, prior 313,000
  • Change in Private Payrolls, est. 190,000, prior 287,000
  • Change in Manufact. Payrolls, est. 22,000, prior 31,000
  • Unemployment Rate, est. 4.0%, prior 4.1%
  • Underemployment Rate, prior 8.2%
  • Average Hourly Earnings MoM, est. 0.28%, prior 0.1%
  • Average Hourly Earnings YoY, est. 2.7%, prior 2.6%
  • Average Weekly Hours All Employees, est. 34.5, prior 34.5
  • 8:30am: Labor Force Participation Rate, prior 63.0%


  • U.S. March Nonfarm Payrolls Rose 103k; Unemp. Rate at 4.1%
  • Nonfarm payrolls, net revisions, -50k from prior two months
  • Participation rate 62.9% vs prior 63%
  • Avg. hourly earnings 0.3% m/m, est. 0.3%, prior 0.1%
    • Y/y 2.7%, prior 2.6% est. 2.7%
  • Nonfarm private payrolls rose 102k vs prior 320k; est. 188k, range 90k-248k from 32 economists surveyed
  • Manufacturing payrolls rose 22k after rising 32k in the prior month; economists estimated 22k, range 5k to 31k from 18 economists surveyed
  • Unemployment rate 4.1% vs prior 4.1%; est. 4%, range 3.9%-4.1% from 71 economists surveyed
  • Underemployment rate 8% vs prior 8.2%

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