JOBS REPORT — What you need to know in markets on Friday

Markets Reporter
Yahoo Finance

The March jobs report is here.

On Friday, the Bureau of Labor Statistics will release the jobs report for March, the week’s biggest economic report that caps what’s been a busy week for markets and the economy.

Economists expect that 185,000 nonfarm payrolls were added in March while the unemployment rate is expected to fall to a new post-crisis low of 4%.

Elsewhere on the economics calendar, the February report on consumer credit balances will be released in the afternoon. On the earnings calendar, no major announcements are expected.

Investors will also look to finish the week on a positive note as stocks rallied again on Thursday with the Dow now having gained about 1,000 from its Wednesday-morning lows.

Job gains have averaged 242,000 per month in the last three months. Economists expect the pace of job gains slowed in March.  (AP Photo/Brennan Linsley)
Job gains have averaged 242,000 per month in the last three months. Economists expect the pace of job gains slowed in March.  (AP Photo/Brennan Linsley)

Jobs report preview

The March jobs report is expected to show the U.S. labor market continues to roll.

Economists expect 185,000 jobs were added to the economy in March, down from the 313,000 jobs that were created in February, but still above what many economists have said is needed for the labor market to sustain the current level of unemployment. Over the last three months, job gains have averaged 242,000.

The unemployment rate is also expected to fall to 4% in March, which would be the lowest level since the financial crisis and break a string of five consecutive months the unemployment rate registered 4.1%.

Wage growth will also be closely tracked, as an increase in worker wages is seen as portending an uptick in inflation. Over the prior month, wages are expected to rise 0.3% and 2.7% over the prior year. Both would be increases from February’s data.

In a note to clients ahead of the report, economists at Goldman Sachs said jobless claims data, service-sector surveys, job postings data, and Wednesday’s private payrolls figure from ADP all augur for a better-than-expected report. Poor weather during March — which was colder and snowier in many parts of the country than February — and a likely reversion in retail sector employment could be drags on the numbers. Goldman is forecasting nonfarm payrolls grew by 200,000 in March.

“While the fundamentals of the U.S. economy remain favorable, we do not think the above-trend performance seen so far this year will extend into March,” said Sam Bullard, senior economist at Wells Fargo.

“Similar to the dampening effects reflected with Q1 U.S. real GDP growth performances since the Great Recession, residual seasonality appears to be at play in Q1 nonfarm hiring,” Bullard added. “Looking back at the initial releases of first quarter hiring back to 2010, we have seen a monthly pattern where two out of the three months will register performances that are closely related, while the remaining month tends to be an outlier.” In this case, February’s stellar job gains are likely to be the outlier.”

Bullard expects Friday’s report to show 175,000 jobs were created in February.

Away from the job gains and wage growth data that are closely-tracked each month, Friday’s report should also see a renewed focus on the labor force participation rate. In February, this rate stood at 63%, matching a four-year high and a sign that participation continues to stabilize and perhaps even show signs of increasing. Stable participation rates have held the unemployment rate steady even as total payroll growth has surged in recent months.

“One of the surprises in last month’s report was the 0.3% increase in the labor force participation rate to 63%,” said Ellen Zentner, an economist at Morgan Stanley.

“We think this was in large part driven by an outsized drop in the number of employed people leaving the labor force (mostly retirees), where flows dropped well below their medium-term averages, rather than necessarily signaling an increase in inflows of formerly discouraged workers.”

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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