Thursday, April 04, 2019

March Employment Preview

by Calculated Risk on 4/04/2019 10:35:00 AM

On Friday at 8:30 AM ET, the BLS will release the employment report for March. The consensus is for an increase of 170,000 non-farm payroll jobs in March, and for the unemployment rate to be unchanged at 3.8%.

Last month, the BLS reported 20,000 jobs added in February.

Here is a summary of recent data:

• The ADP employment report showed an increase of 129,000 (Updated: typo corrected, HT Dwight) private sector payroll jobs in March. This was below the consensus expectations of 160,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any one month, but in general, this suggests employment growth below expectations.

• The ISM manufacturing employment index increased in March to 57.5%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll increased about 20,000 in March. The ADP report indicated manufacturing jobs decreased 2,000 in March.

The ISM non-manufacturing employment index increased in February to 55.9%. A historical correlation between the ISM non-manufacturing employment index and the BLS employment report for non-manufacturing, suggests that private sector BLS non-manufacturing payroll increased 230,000 in March.

Combined, the ISM surveys suggest employment gains above the consensus expectations.

Initial weekly unemployment claims averaged 213,000 in March, down from 224,000 in February. For the BLS reference week (includes the 12th of the month), initial claims were at 216,000, down slightly from 217,000 during the reference week the previous month.

The decrease during the reference week suggests a stronger employment report in March than in February.

• The final March University of Michigan consumer sentiment index increased to 98.4 from the February reading of 93.8. Sentiment is frequently coincident with changes in the labor market, but there are other factors too like gasoline prices and politics.

• Weather could have negatively impacted the February report, and there might be some bounce back in March.

• Conclusion:  In general these reports suggest a solid employment report.   There might be some bounce back from the poor weather in February, so my guess is job growth will above consensus of 170,000.