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.
A few forecasters are predicting 275,000: Joe LaVorgna and Carl Riccadonna at Deutsche Bank, Brian Jones at Société Générale, and Toby Dayton at LinkUp.
Here are their previews of the release:
JOE LAVORGNA AND CARL RICCADONNA, DEUTSCHE BANK: We are anticipating a sizeable increase in March employment, when the data are reported on Friday. While our forecast of +275k appears aggressive at first glance, it actually reflects a return to trend job creation of approximately +175k (the six-month average is +177k) with a weather-related payback of roughly +100k. This is consistent with prior episodes in which weather-impairment was followed by a temporary surge. However, it is unlikely the March report will fully reflect payback from the recent weather disruptions spanning December-February, so we expect April payrolls to also show an elevated increase relative to the underlying trend. Beyond the headline payroll print, it will be equally important for forecasters to track aggregate hours worked, because weather also reduced the length of the workweek for many workers last month — thereby reducing paychecks for hourly workers. In fact, according to data from the household survey, 6.9 million workers experienced reduced hours due to bad weather in February — the highest reading of any February since at least 1977. Depressed hiring and reduced hours over the past few months have taken a toll on wage and salary income, which rose just +1.3% annualized since November. A rebound in aggregate hours will provide an important indication that income growth is reaccelerating, thereby making allowance for faster consumption gains. There is already some evidence in other labour series that this recovery is underway. Two key labour metrics — jobless claims and tax receipts — corroborate our view that underlying economic momentum has not faded. Initial jobless claims have improved significantly since late February. The four-week moving average (318k) is at a post-recession low (barring a brief period when the figures were distorted in H2 2013). Similarly, withheld income tax receipts are also sending a strong positive signal, as shown in the figure below. Due to the expiration of the payroll tax holiday at the end of 2012, tax receipts were elevated in 2013. The tax receipt trend in early 2014 is more meaningful, because it compares periods with similar tax rates. The recent acceleration is an encouraging sign that the labour market continues to improve, particularly since the latest data point (+8.4% year-on-year) is consistent with the growth rates during two prior periods of healthy job creation (1994 to 2000 and late-2004 to early-2007). Since tax receipts are not subject to revision, the recent results give us confidence that a significant pickup in hiring is coming soon.
BRIAN JONES, SOCIETE GENERALE: Hiring heated up with temperatures in March A marked improvement in weather conditions, along with solid underlying demand for new workers, probably propelled nonfarm payrolls 275,000 higher in March, in our view, more than double the 129,000 average net hires posted over the prior three months (see chart below left). Fundamental and climatic factors support our call for yet another above-consensus print. Consistent with a further slowdown in layoffs, the average number of persons filing initial claims for unemployment insurance benefits over the four weeks heading into the March establishment survey fell by 11,000 to 327,000 — the lowest level since October 2007. Hinting that many of the previously unemployed found work between canvasses, the number of persons on regular state benefit rolls likely contracted by 145,000 to 2.8 million — the first decline in four months. Despite the surge in the number of persons unable to work because of bad weather in February, the breadth of worker additions across non-agricultural establishments narrowed only marginally, with the BLS’ one-month diffusion index retreating from 60.6 to a still very respectable 59.3.
Positive swing in weather conditions buoyed hiring Weather conditions are expected to provide a significant lift to job creation in March. At 42.1o F over the first two weeks of the month, the average temperature nationwide was just one degree below normal compared to the 5.6o F shortfall over the corresponding period in February. Indeed, we have assumed in our forecast that the number of persons unable to work because of bad weather in the household survey — our proxy for the impact of climatic conditions on jobs — dropped to 124,000 in March from the eye-catching 601,000 recorded in February (see chart below centre). After adjusting that household survey series for seasonality, our statistical model projects a 35,000 boost from improved weather in the March report.
Net prior-month revisions once again expected to be positive Continuing a string of upward adjustments going back to last September’s report, we expect the BLS to boost modestly the previously posted net job gain over the January-February span. Our statistical model’s in-sample estimates hint that while the preliminary February print might be trimmed by 27,000 to 148,000, the final January figure will be raised by 51,000 to 180,000 (see chart below right), producing a cumulative upward revision of 24,000 jobs.
TOBY DAYTON, LINKUP: Feeling a bit like Charlie Brown as we await Friday’s jobs report, we are forecasting very strong job gains in March, capping a solid quarter overall for the nation’s labour market. But if this feels like deja vu all over again, it’s because we’ve been here before. In fact, over the past 3 years, the economy began each year with strong job gains only to see the labour market weaken over the subsequent 3 quarters of the year. In only 1 of the 9 quarters following the 1st (Q4 ’11) did job gains exceed the high-water market set in that year’s 1st quarter.
And so here we are again. Based on our data from February in which new and total job openings in LinkUp’s job search engine (which indexes 2 million jobs from 50,000 corporate websites) rose 5.5% and 5.7% respectively, we are forecasting that a net gain of 275,000 jobs were added to the U.S. economy in March. Not accounting for any potential BLS revisions, that would result in Q1 job gains of 579,000 — not quite as solid as 2012 or 2013, but substantially better than 2011.
Unfortunately, in each of the 3 years between 2011 and 2013, the labour market slowed markedly in the 2nd quarter, with job growth declining an average of 40% from the 1st quarter. In 2012 the drop was particularly horrific, with job gains dropping from 677,000 in Q1 to a miserable 200,000 in Q2.
But just like good Ol’ Charlie Brown, we remain hopeful that this time maybe, just maybe, things will be different. Maybe this time, Lucy won’t pull the ball away from us at the last minute. Maybe this year is truly the ‘gear year’ as Jim Paulsen calls it. If our data from March is any indication, at least April should kick off Q2 with very strong job gains.
In March, new job listings on company websites rose by 18%, while total job listings rose by 8%. Even more encouraging, new and total job listings rose in all 50 states.
Similar growth was seen in new and total job openings by category, with new listings rising 20% from February and total listings climbing 8% from the prior month. Increases occurred in 30 of 31 job categories tracked by LinkUp with new openings in Oil, Gas, & Utilities as the only decline.
With the blended average gain of 5.6% in new and total job listings seen in February and the 4.3% seen in March (which is different than the data tables for March shown above due to our paired-month methodology), we are forecasting net job gains of 275,000 for March and our preliminary forecast for April is a net gain of 325,000 jobs.
Let’s hope we’re not being a blockhead about the outlook.
The jobs report is due out from the U.S. Bureau of Labour Statistics at 8:30 AM ET. Click here for a complete preview »
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