Jobs Report Beats, Wage Growth Cools As Goldilocks Makes Friday Cameo

One person who’s probably hoping the March jobs report comes in some semblance of “solid” is Jerome Powell.

Earlier this week, the Wall Street Journal revealed that following February’s disappointing headline print (which betrayed the slowest pace of job creation since September 2017), Donald Trump actually picked up the phone and called the Fed chair, presumably to complain and otherwise vent amid what was the worst week for US equities of an otherwise stellar quarter.

Sources who spoke to the Journal said Trump has lambasted Powell in a trio of recent meetings. Steve Mnuchin (who Trump blames for Powell’s appointment) was also the target of the president’s ire.

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‘Chair Powell, You Have A Call — It’s Donald Trump’…

Since Trump’s phone chat with Powell, equities have resumed their buoyancy, the Fed delivered another dovish surprise and coming into March payrolls, the S&P is riding a six-session win streak. On Thursday, jobless claims printed a 49-year low.

Meanwhile, global equities are in something that approximates “melt-up” mode to start Q2 following upbeat PMI data out of China (which kick-started the first week of the new quarter), an ISM beat earlier this week stateside and ongoing speculation that a Sino-US trade pact is close to being a done deal.

Of course Trump still isn’t satisfied with Powell and, apparently, he never will be. The Q4 swoon in risk assets that manifested itself in the worst December for US stocks since the Great Depression was an unforgivable “sin” in the president’s eyes. So, the attacks on the Fed have continued and Trump’s decision to appoint two loyalist stooges to the Fed board smacks of vindictiveness.

That’s the setup for March payrolls.

“We expect payrolls to move up 175k in March, returning to a pace in line with their underlying trend”, Barclays wrote in their preview, adding that “trend employment growth should be sufficient to push down the unemployment rate by another 0.1pp, to 3.7%.”

“We expect nonfarm payroll employment growth of 190k in March after a notable slowdown in job growth to 20k in the prior month”, BofAML said late last week, weighing in and noting that “the strong reading from our private payroll tracker suggests that last month’s slowdown in job gains may prove temporary and poses upside risk to our official forecast.”

Here’s what Goldman was expecting, for anyone who cares:

We estimate nonfarm payrolls increased 190k in March, 15k above consensus and a sharp pickup from the +20k February reading. Our forecast reflects a boost from weather of around 20k (relative to trend), as snowfall swung from above-average to below-average between the payroll reference weeks. While we believe the trend in job growth has slowed from last year’s strong pace, renewed declines in jobless claims and the resilience in business surveys suggest that the trend remains nicely above potential. We also note that the recent drop in consumer employment surveys may be telling us more about February than about March, as the widely reported payroll miss last month may have itself influenced survey responses (and the Conference Board measure is indeed less predictive in these instances).

In addition to the headline print, folks will also be keen to see if February’s hotter-than-expected wage growth persisted in March.

As a reminder, we’re still riding a record streak of monthly gains, now at 101.


Without further ado, that streak continued in March, as expected. The headline is a solid beat at 196k. Last month was revised up slightly.

Additionally, wage growth cooled off, as average hourly earnings missed MoM and the YoY pace fell to 3.2% from a cycle high of 3.4% previously. That is great news for the Fed as it suggests they are correct not to fret about a labor market overheat catalyzing a “rogue” AHE print that catches them behind the proverbial curve. In other words, it’s just more cover for the “patient” approach while the solid headline jobs number underscores a generally upbeat assessment of the US economy, which should bolster risk appetite.

“[This is] a bit of a vol killer, if vol has not been killed enough,” Deutsche’s Alan Ruskin said Friday, adding that the numbers “assuage both the downside and upside fears.”

One thing that won’t please Trump (assuming he’s even interested in the internals) is the first decline in manufacturing employment since 2017.

You’re unlikely to see a tweet about that from the White House.

In any case, this looks like a “Goldilocks” report and it should please the likes of Larry Kudlow and, hopefully (for Jerome Powell’s sake) the president.

Estimates and Priors

  • Change in Nonfarm Payrolls, est. 177,000, prior 20,000
  • Change in Private Payrolls, est. 176,500, prior 25,000
  • Change in Manufact. Payrolls, est. 10,000, prior 4,000
  • Unemployment Rate, est. 3.8%, prior 3.8%
  • Average Hourly Earnings MoM, est. 0.3%, prior 0.4%
  • Average Hourly Earnings YoY, est. 3.4%, prior 3.4%
  • Average Weekly Hours All Employees, est. 34.5, prior 34.4
  • Labor Force Participation Rate, est. 63.2%, prior 63.2%
  • Underemployment Rate, prior 7.3%


  • U.S. March Nonfarm Payrolls Rose 196k; Unemp. Rate at 3.8%
  • Nonfarm payrolls, net revisions, 14k from prior two months
  • Participation rate 63% vs prior 63.2%
  • Avg. hourly earnings 0.1% m/m, est. 0.3%, prior 0.4%; Y/y 3.2%, prior 3.4% est. 3.4%
  • Nonfarm private payrolls rose 182k vs prior 28k; est. 177k, range 98k-246k from 34 economists surveyed
  • Manufacturing payrolls fell 6k after rising 1k in the prior month; economists estimated 10k, range 3k to 18k from 22 economists surveyed
  • Unemployment rate 3.8% vs prior 3.8%; est. 3.8%, range 3.7%-4% from 71 economists surveyed
  • Underemployment rate 7.3% vs prior 7.3%
  • Change in household employment -201k vs prior 255k

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