Companies were expected to have hired slightly fewer workers in March than in February, but economists say the employment picture continues to improve.
The consensus forecast is that 203,000 total jobs were added in March and that the unemployment rate held steady at 8.3 percent, according to Thomson Reuters. That compares to 227,000 workers added in February.
“The one thing that’s in our forecast, is we’re assuming the construction sector got some lift from the unusually warm weather over the last few months, and we’re assuming no further lift from that this month, so that’s the reason we have a slower pace of growth,” said Barclays Capital chief U.S. economist Dean Maki.
Maki said he expects to see total payrolls of 200,000, a decline from the prior three months average of 245,000. The private sector is likely to have added 215,000 jobs.
“It’s modest deceleration, but 200,000 is still a solid job growth number. We think the unemployment rate is going to fall again, another tenth (to 8.2 percent). One of our strong views is that the unemployment rate is going to fall faster than people expect. We believe the bulk of the decline in the participation rate, about two-thirds of it, is the baby boomers retiring,” he said. “That means we’re not going to see the surge in the participation rate that many people are expecting.”
A move higher in the participation rate, or those looking for jobs, would drive the unemployment rate higher.
The March jobs report is released at 8:30 a.m. ET Friday, a day when the U.S. stock market is closed for the Good Friday holiday. The bond market and futures markets, however, will be open for part of the day. The last time the jobs report was released on Good Friday was in 2010.
Pierpont Securities economist Stephen Stanley expects an above consensus 235,000 nonfarm payrolls and a drop in the unemployment rate to 8.2 percent. He does not see a big weather-related giveback this month.
“As the economy starts to normalize, we are going to get growth. The conditions are ripe for a good amount of hiring, even with low growth of 2 to 3 percent,” he said. “One thing that makes it impressive is it’s a broad-based thing. We’ve seen manufacturing, construction, and retail has done well, restaurants in particular. Things are not great, but they’ve gotten better. Companies have been excessively conservative, and they’re about to come out of their shells.”
The employment report is also seen as a pivotal data point by some traders, who say an in-line or strong number will not make much difference, but a weaker-than-expected number could be a possible lever to push the Fed towards further easing. The Fed next meets on April 24, and it is not expected to take action at that meeting.
“The level of bullishness has reached a point, where I think that even if the number is a little weaker than expected, people are going to look at the underlying trend, which is one of improvement, and that would minimize any downside,” said Daniel Greenhaus, global market strategist at BTIG.
Thursday’s weekly jobless claimswas an encouraging sign for the jobs market, though the number does not factor into the March employment report. Claims fell 6,000 to 357,000, the lowest level since April, 2008.
“We’re stabilizing in terms of unemployment claims, which is good news. They’re at lower levels, but we’re still at recession level, and we’re still not generating enough jobs to bring down the unemployment rate in a demonstrative way,” said Mesirow Financial chief economist Diane Swonk. She expects to see a total 193,000 nonfarm payrolls were added in March.
If nonfarm payrolls come in at 200,000, it would be the fourth month in a row of 200,000 plus growth. The last time that happened was in October, 1999 through January, 2000.
Goldman Sachs expects to see just 175,000 jobs were created in total, a number that takes into account a weather effect in prior months. “The underlying indicators still look quite consistent with quite strong job growth,” said Goldman economist Andrew Tilton.
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