March Employment Preview

We expect payrolls to rise 45 k in March , which would represent a solid rebound from the dismal February employment report. The first two payroll prints for this year have deviated from expectations with January’s figures surprising to the upside and February’s surprising to the downside, and for March, the range of estimates is wide (+151k to -16k). A print of 45k would be roughly in line with the breakeven pace of job growth, given changes in the population. We expect a slight rise in the unemployment rate to a rounded 4.5% (from 4.44%). A few one-off factors that weighed on February’s print that should reverse at least partially for March, include the return of about 32k workers from strikes and favorable weather the week the BLS survey was conducted, which should aid weather-sensitive sectors. A mediocre to good employment report is unlikely to materially shift the near-term Fed policy outlook as the Fed will adopt a “wait and see” approach to how the labor market and inflation are responding to events in the Middle East. Another negative print however, should elicit concerns that the softer labor force observed over the last year is further weakening in light of greater economic uncertainty.