E Economics

US March Employment Preview – NFP

01 April, 2021
US March Employment Preview - NFP

On Friday, the US Bureau of Labor Statistics (BLS) will release the employment report for March. The consensus for change in nonfarm payrolls (NFP) is for 660k jobs created (up from +379k in February).

→ Most of labour market proxies suggest that risks are skewed to the upside in a context where:

      • weather conditions normalized after being particularly adverse in February (absences from work due to bad weather were three times larger than normal)
      • most of states kept lifting Covid-19 restrictions which translated into a spike of mobility
      • business confidence returned amid acceleration of vaccine rollout and massive fiscal support



– Using a new set of data, Homebase pointed to “significant improvements in March“. In the details, the report highlighted “the entertainment and hospitality sectors are driving the positive news as restrictions continue to lift nationwide“. As a reminder, 94% of jobs added in February (355k) came from the leisure and hospitality sectors.



– On March 26, 2021, job postings on Indeedwere 13.5% above February 1, 2020, the pre-pandemic baseline, after adjusting for seasonal variation.” In the details, “That’s a big jump from a week earlier, when postings were 10.7% above the baseline. Postings improved over the past week at a faster rate than during the summer 2020 rebound, when postings rose by an average of 1.6 percentage points per week.”



– Other high frequency indicators were robust in March. As an example, ZeroHedge noted that JPMorgan alternative model implies the matched BLS print will be around 1.8 million jobs.



– During the survey period in March, Initial Jobless Claims fell to 765k, down from 847k the previous month, suggesting less layoffs. This trend looks coherent with the Challenger, Gray & Christmas, Inc. report. It showed “Job cuts announced by U.S.-based employers fell 86% in March to 30,603 from the 222,288 job cuts announced in the same month last year“. It added “March’s total is 11% lower than the 34,531 cuts announced in February. It is the lowest monthly total since July 2018 when 27,122 cuts were recorded.


– Signals from other monthly surveys were somehow encouraging. On Tuesday, the Conference Board survey highlighted that consumer confidence surged in March (the best month-over-month gain for the top-line index since 2003). Regional gains were concentrated in the areas where weather conditions were unfavourable in February. Focusing on the labour market, the survey showed that consumer assessments of labor conditions improved markedly in March. The share of households seeing “jobs plentiful” skyrocketed (26.3% vs. 21.6%) while those seeing “jobs hard to get” fell (18.5% vs. 22.4% prior). It’s interesting to note that the 4.7 index point jump in the assessment of jobs plentiful was the largest since August 2019.


– On Thursday, Bloomberg reported “the ISM Manufacturing survey expanded in March at the fastest pace since 1983, catapulted by the firmest orders and production readings in 17 years.” In the meantime, “The ISM’s measure of factory employment improved to a more than three-year high of 59.6 in March from 54.4 a month earlier.” Earlier, the final reading of the Markit manufacturing PMI for March underlined “firms expanded their workforce numbers further and at a solid rate.



Also on Thursday, Bloomberg cited a report by the National Federation of Independent Business which showed “Some 42% of firms had job openings last month, and 56% of owners reported adding workers or trying to hire in March. Nearly a quarter of those surveyed are planning to create jobs in the next three months, the second-highest reading since 2018.



– Finally, ADP reported Wednesday that private employers added more jobs in March than at any point over the previous five months. The U.S. economy created 517k private-sector jobs in March, up from 176k prior.


All in all, it seems that most of indicators (high frequency data and surveys) point to a strong reading for NFP and even an upward surprise (Bloomberg consensus: 660ke).



It’s important to remember that the U.S. employment report presents statistics from two major surveys, the Current Population Survey (CPS; household survey — associated with unemployment rate) and the Current Employment Statistics survey (CES; establishment survey — associated with NFP). The most important thing is that, according to the BLS, “For both surveys, the data for a given month relate to a particular week or pay period. In the household survey, the reference period is generally the calendar week that contains the 12th day of the month. In the establishment survey, the reference period is the pay period including the 12th, which may or may not correspond directly to the calendar week.”