5 Economist Predictions For Friday Jobs Report: Did NFPs Fall More Than Expected In March?

A week of below-than-expected macroeconomic data for the U.S. increased the risk of an incoming economic recession as investors await a key job market report on Friday, April 7. 

Despite the fact that markets are closed for Good Friday, the March employment report will be a major data signal for the Federal Reserve's future policy measures, with significant implications for rates and asset prices.

The U.S. Economy Is Cooling

The most recent labor market data is beginning to show symptoms of cooling. According to recent ADP data, private employers added 145,000 jobs in March. That's significantly below the 200,000 that was projected and down from 261,000 in February.

Initial unemployment claims for the week ending April 1 also came higher than thought on Thursday, hovering at around 228,000 — above the 200,000 forecasted.

On top of the dismal data on the labor market front, manager surveys showed sharper-than-expected drops, with both the ISM Manufacturing and Services PMI falling in March.

Meanwhile, S&P Global's earlier PMI estimates were revised downward.

In short, everything appears to point to a less tight labor market report than we have gotten accustomed to in recent months.

But What do Wall Street Economists Think?

The consensus from Wall Street analysts expects nonfarm payrolls to slow from 311,000 in February to 239,000 in March, the unemployment rate to remain unchanged at 3.6% and average hourly increasing increasing 0.3% on the month (0.2% prior) and 4.3% on the year (4.6% prior).

• Citigroup forecasts a robust 250,000 growth in nonfarm payrolls in March, with the unemployment rate falling to 3.5%. This should help concentrate the Fed on the need to keep raising rates in the face of a still-tight labor market, according to Citi Economist Veronica Clark. Markets are also expected to be more sensitive to negative surprises in any data during the next several weeks, she noted. Nonetheless, Citi expects inflation data, particularly after the May meeting, to keep the Fed raising to a terminal policy rate of 5.50-5.75%.
• Bank of America Securities predicts an increase in nonfarm payrolls of 265,000, which is somewhat higher than the consensus estimate but far lower than February's figure. BofA believes that the pace of hiring slowed marginally in March due to the weather. The unemployment rate is predicted to drop by a tenth to 3.5%, while the labor force participation rate is forecast to remain steady at 62.5%.
• Goldman Sachs shares the same view, and predicts a 260,000 increase in nonfarm payrolls in March, . Economists at GS expect that, in a tight labor market, job growth will slow in March from its rapid winter pace, and big data employment indicators bear this out. Snowier weather in the Northeast and Midwest, according to Goldman Sachs, is expected to be a 40,000 drag for March's NFPs. 
• Comerica forecasts 200,000 nonfarm payroll jobs to be added in March, with the unemployment rate rising from 3.6% in February to 3.7% in March. Average hourly wages growth is likely to have slowed to 0.2% month on month, and the average workweek has likely shrunk as employment growth has shifted toward leisure and hospitality, which has a shorter workweek and fewer extra hours worked than manufacturing.
• BMO Economics predicts a robust NFP increase of roughly 240,000, bringing the total for Q1 to more than 1 million net new employment, rendering recession worries irrelevant, at least for the time being.  In the face of banking sector pressures, the overall tone for the early March reading is projected to be basically strong.

Next: Recession Panic Sends Investors Flocking To Treasuries: How Low Can The 10-Year Yield Go?

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