Today, the U.S. Bureau of Labour Statistics will release the March jobs report.
This one is definitely interesting because it follows three months of subpar readings on the state of the labour market, indicative of weakness many have been quick to attribute to the unusually harsh winter weather America has experienced this year.
On a seasonally-adjusted basis, only 129,000 jobs were created on average over the three-month period through February. The 12-month average prior to the onset of bad weather in December was 204,000, and the last three months of data have dragged that number down to 183,000.
The weather lifted in March. The big question is whether the U.S. economy saw a big “snap back” in hiring as business as usual resumed last month.
“The hope among forecasters and most investors that we spoke with is that weather effects on data are finally about to be erased, especially as there was less disruptive snowfall in March,” says George Goncalves, head of rates research at Nomura.
The median forecast of the 90 market economists polled by Bloomberg calls for payroll gains of 200,000 in March, entirely from job creation in the private sector. The low estimate is 150,000 and the high estimate is 275,000.
The unemployment rate, meanwhile, is expected to tick down to 6.6% from 6.7%. Average weekly hours worked is expected to rise to 34.4 from 32.2. The length of the average work week has fallen over the last three months from 34.5 hours in November as weather has kept workers at home.
This puts wage growth in the spotlight.
In February, average hourly earnings rose 0.4% — the biggest monthly gain since June. The rise boosted the year-over-year change in earnings to 2.2% from 2.0%.
Economists predict monthly earnings growth slowed back down to 0.2% in March, which would further boost annual wage growth to 2.3%.
Friday’s release should clarify how much last month’s wage gains were a fluke.
“Specifically, it has been argued that some hourly wage workers still were paid even if the weather prevented them from working,” explains Maury Harris, chief economist at UBS.
“If that were the case and if the hours worked of such workers were reported as down, reported average hourly earnings statistics would be upward biased. However, we have at least tentatively rejected that hypothesis. When we compared average hourly earnings changes and average workweek changes across industries in February, we did not observe the negative correlation implied by the hypothesis.”
Of course, there’s a good chance that if we don’t see any sort of weather-related snap back in hiring in March, investors will hold out hope for April.
“Historically we see a good amount of variability in the pace and timing of the recovery as the colder months pass,” says Nomura’s Goncalves.
“The 1995-96 winter was the most dramatic, where nonfarm payrolls beat expectations by 605,000 in February after disappointing by 344,000 in January. In other years, large rebounds relative to expectations took longer to surface — until March in 1994 and until April in 2010 and 2011. One possible concern is that because the magnitude of recent nonfarm payroll misses paled the 1996 misses, the risk of a significant rebound is skewed more toward the April print (as in 2010/11) rather than the upcoming March print.”
The results of the Institute for Supply Management’s monthly survey of purchasing managers at U.S. non-manufacturing firms released Thursday suggested that after a reduction in employee headcount in February, companies were back to hiring in March.
The ISM non-manufacturing employment sub-index — a number closely watched by traders, because service industries account for around 80% of hiring in America and economists use it as an input into their forecasts for the official jobs report — posted its biggest monthly gain on record.
“Overall, we expect the stronger tone of ISM employment data to augur positively for Friday’s nonfarm payroll report,” says Gennadiy Goldberg, a U.S. strategist at TD Securities.
The BLS releases the jobs report on Friday morning at 8:30 AM ET. Follow the data LIVE on Business Insider »