Nonfarm payrolls: increased by 175k in March? - Nomura

Analysts at Nomura offered their outlook for US Employment report (Friday).

Key Quotes:

"We expect nonfarm payrolls to have increased by 175k in March. For private payrolls, we forecast an increase of 170k, implying government payrolls increased by 5k. Incoming data on the labor market suggest a trend-like pace of job creation in March after two previous months of outsized gains. Employment sentiment data, including the Empire State, Philly Fed and ISM manufacturing surveys, indicate healthy hiring activity in March. 

Initial and continuing claims remain near historically low levels, indicating businesses continue to hold on to their workers as labor market conditions tighten further. As for the manufacturing payroll, we expect an increase of 20k. Incoming data suggest a steady pace of improvement in manufacturing activity and highly elevated optimism. Yet, we expect some downside risk, as some of the gains in nonfarm payrolls in January and February were, in part, boosted by unusually warm weather. 

In particular, unusually warm weather in January and February may have shifted forward construction employment gains to the beginning of this year, portending to some negative payback in March. In addition, we expect the unemployment rate to have remained unchanged at 4.7%. 

After two consecutive months of strong private payroll gains of around 200k we expect more job seekers to rejoin the labor force, attracted by favorable labor market conditions. However, we think the healthy pace of job creation was enough to keep the unemployment rate unchanged. Last, we expect average hourly earnings to have increased by 0.2% m-o-m (2.71% y-o-y), a slight slowdown from a 2.80% y-o-y increase in February."