March Payrolls Preview: A Substantial Bounce

Following the dismal February payrolls print which showed a 92K drop, the biggest in years, the March jobs report is expected to show a rebound to 65k jobs added, although participants will be alert to revisions, as ING suspects January overstated strength while February overstated weakness. Private payrolls are seen rising 73k from -86k, the unemployment rate is expected to remain at 4.4%, while wages are forecast to increase 0.3% M/M and 3.8% Y/Y (more details below). The Fed has signaled it is in wait-and-see mode, with added risks from the Iranian war, but the report will be used to gauge labor market strength, particularly after Februaryʼs weak print. While inflation remains the Committeeʼs broader concern, the labor market is still in focus, with Waller noting he would have cut rates at the February FOMC following the last jobs report, but the war changed things. Ahead of the release, March ADP was firm, ISM manufacturing employment was little changed M/M, and consumer views on current labour market conditions were largely unchanged, though expectations deteriorated. On the sell side, Barclays expects a modest 50k headline gain after Februaryʼs sharp and distorted drop, with private payrolls expected to rise by 50k, no change in government payrolls, and unemployment is expected to remain at 4.4%. ING looks for a 65k increase, noting that if hiring stalled when conditions were stable, heightened geopolitical and economic uncertainty is unlikely to prompt firms to hire.

Expectations