US: Expect a 160k gain in nonfarm payrolls – TD Economics

Analysts at TD Economics expect a 160k gain in US nonfarm payrolls following 200k+ gains over the prior two months as the moderation expected in March is mainly attributed to weather effects.

Key Quotes

“In February, unseasonably warm weather may have boosted payrolls by as much as 80k. This alone suggests a future drag on job gains in the coming months. In addition, disruptive weather in March may introduce another negative impact, as the snowstorm hitting the eastern regions fell in the survey reference week. Both effects suggest risk for a negative hit to March payrolls, though we caution on penciling in significant downside.”

“Importantly, outside of these disturbances, labor market indicators are consistent with another monthly payroll gain north of 200k, though we await the latest March figures from the ISM employment surveys. Employment survey data (regional Fed indicators and Conference Board consumer confidence) and jobless claims through March continue to point to healthy levels of labor demand. Notably, the Conference Board labor differential (jobs viewed as plentiful less hard to get) climbed to a new cycle high of 12.2, signalling further declines in labor market slack. By industry, we expect to see more positive contributions from the manufacturing and mining sectors in line with factory employment indicators and the rising US oil and gas rig count. Any negative weather effect is likely to show up in construction jobs, which bounced by a sharp 58k in February.”

“The unemployment rate is expected to be unchanged at 4.7%, with roughly balanced risks. We look for a 0.2% m/m increase in average hourly earnings in March, resulting in a small pullback in the year-on-year pace to 2.7% from 2.8%.”