A person works on a Bowlus RV at the Bowlus factory in Oxnard, California, United States, February 23, 2024. Each Bowlus RV is hand assembled with aircraft grade rivets and is hand polished.
Timothée Aeppel | Reuters
March’s nonfarm payrolls count will likely indicate that hiring continues at a solid pace, although some weakened labor market fundamentals may receive more attention when the Labor Department releases its report key Friday morning.
Job growth is expected to reach 200,000 over this period, according to the Dow Jones consensus forecast. If accurate, this will mark a slowdown from the 275,000 initially reported in February, but it will still be a high pace in historical terms.
Yet a funny thing has happened recently with employment reports: initially high numbers have tended to be lowered in later estimates, raising the question of whether the employment situation is as positive as it seems. she seems so.
This will be just one of several key areas of focus when the report is released at 8:30 a.m. ET.
Strong, but to what extent?
The February release raised eyebrows with a gain that topped Wall Street forecasts for 198,000 new jobs. However, revisions from the previous two months also received attention, reducing December from 43,000 to 290,000 and January from 124,000 to 229,000.
For all of 2023, the revisions cut initial estimates by 520,000 — there are three readings in total — bucking a historical trend whereby final numbers are typically higher than initial readings.
This trend “makes me question the credibility of the first number,” said Dan North, senior economist at Allianz Trade Americas. “So I’m going to look at the previous month’s revisions to see if they’re going to be reversed, and they most likely will be. So if you get a big number, take it with a grain of salt.” “
On Wall Street, an upside surprise is expected: Goldman Sachs raised its initial forecast to 240,000, an increase of 25,000, following strong private employment data from ADP showing a gain of 184 000 over the month, and other indicators.
Growth drivers
Besides the numbers, the composition is important, namely where the growth is coming from and whether there are any cracks in job protection. The resilience of the labor market has confounded many economists who have spent the past two years researching an employment-induced recession that never happened.
“Businesses are seeing strong demand. They’ve dramatically increased their productivity and so they’re hiring for different types of jobs,” said Luke Tilley, chief economist at Wilmington Trust. “This allowed them to deal with a high-rate environment.”
However, there are areas of concern.
Household employment, which takes into account individual workers rather than all jobs and is used to calculate the unemployment rate, has fallen by almost 1 million since November. The survey is more volatile and uses a much smaller sample than the establishment count which gives total payroll growth. But there is no obvious reason for this weakness, although some economists believe it could be due to the rise in illegal immigration in recent years.
In addition, full-time employment has declined slightly over the past year, while the number of part-time workers has increased by more than 900,000. There has also been a sharp decline in the number of agency workers, a sign classic of a slowdown.
Inflation signals
Federal Reserve officials will monitor all of these factors for signs of inflationary pressures. Stocks have been under pressure this week as investors worry about the direction of monetary policy.
Average hourly wages are expected to have increased 0.3% in March, a jump from 0.1% in February, although the estimate for the annual gain is 4.1%, or 0.2 points. percentage less.
If the consensus forecast is correct, it is unlikely to do much to move the Fed, which is expected to begin gradually cutting interest rates starting in June, according to futures market prices tracked by the CME Group.
“Unless there’s an overwhelmingly positive or downright tragic jobs report, they’re going to stay the course,” North said. “They’ve been very clear recently in pushing back on the market that we’re not in a big hurry, that inflation hasn’t gone down to 2%.”
For his part, however, North indicated that he expects the Fed to wait until July before starting to cut rates, contrary to current market expectations.
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