Preview: Due April 3 - U.S. March Employment (Non-Farm Payrolls) - Forecast revised up on returning strikers, but still implying a subdued trend
We now expect March’s non-farm payroll to rise by 50k overall and by 60k in the private sector, both revised up by 30k due to the ending of strikes, largely in health, as shown in Friday’s strike report. This is still consistent with a subdued labor market picture, which a rise in unemployment to 4.5% from 4.4% and a slower 0.3% increase in average hourly earnings would also imply.
The average of January’s 126k increase and February’s 92k decline is 17k, while for the private sector a 146k January increase and a fall of 86k in February leaves an average of 30k. In December the three month private sector average was 32k and that for overall payrolls negative at -7k, depressed by particularly heavy public sector layoffs in October, as DOGE layoffs came through.
30k appears to be where the private sector trend is with risk for January and February revisions marginally negative and government likely to remain slightly negative even if the DOGE layoffs are now history. March data will however receive support from 32k returning strikers, mostly in health care. The strike exaggerated the February decline.
Initial claims remain low and were particularly so in the survey week for March’s payroll, when weather was unusually mild, though we do not expect weather to be a major net factor in March’s payroll with late February having seen some bad weather after that month’s payroll was surveyed. Low initial claims suggest limited layoffs, but more stable continued claims suggest hiring is limited too. Seasonal adjustments get increasingly negative in the spring, which is a downside risk, but it is too early to expect a significant impact from the situation in the Middle East.
With payrolls unlikely to change much overall, few individual sectors are likely to change much. Most recent payroll growth has come from health care, and this was particularly volatile in January, surging by 116k before correcting lower by 19k in February, though February would have avoided a decline without the strike. We expect a 70k increase in the sector in March, 32k from returning strikers.
February’s unemployment rate was 4.44% before rounding suggesting risk is for a rise to 4.5% at least after rounding in March. The change is likely to be marginal, though we expect growth in the labor force to be marginally above that for employment. February’s participation rate of 62.0% was the lowest since December 2021. We expect a marginal rise to 62.1% in March.
The last five months have seen average hourly earnings increasing by 0.4% in four but by only 0.1% in December. We expect March to increase by 0.3%, 0.27% before rounding, on the low side of trend after two above trend months. Yr/yr growth would then slow to 3.6% from 3.8%, which would be the lowest since July 2024. Higher gasoline prices may boost wage demands, but only if sustained.
Three of the last four months, including January and February, have seen the average workweek at 34.3 hours, an improvement from six straight months at 34.2 ending in October. This is consistent with the economy still having some underlying momentum, with the slowing in employment in part due to reduced labor supply.
