US: Nonfarm payrolls expected to throttle back to a more subdued 170,000 gait in March – BMO CM

Sal Guatieri, Senior Economist at BMO Capital Markets, explains that after bolting out of the gate this year, nonfarm payrolls are expected to throttle back to a more subdued 170,000 gait in March, shy of the six-month trend (+194,000).

Key Quotes

“The snowstorm that walloped the northeast in the survey week (sending jobless claims spiking) should bias the tally lower. But it won’t mask the sturdy trend in job creation across most industries, which is expected to continue this year. The unemployment rate is expected to slip to 4.6%, and the more inclusive U6 measure (which includes part-time workers seeking longer hours and persons outside the workforce pining for a job) will likely decline for a sixth straight month to nine-year lows.”

“According to the latest Conference Board consumer sentiment survey, job prospects have never been better in the past 16 years. Average hourly earnings likely rose 0.3%, holding the annual rate at 2.8%, up modestly from 2.5% a year ago. According to our 16indicator measure of slack in the labour market (which compares current conditions with long-term norms), the economy is virtually back to full employment. The Fed will be looking for continued strength in labour markets to extend the tightening cycle, keeping a June rate hike very much on the table.”