US: March job report offers no compelling evidence of acceleration - Nomura

In view of the analysts at Nomura, US March nonfarm payrolls surprised on the downside, increasing only 98k (Nomura: 205k, Consensus: 180k) and private payrolls increased 89k (Nomura: 200k, Consensus: 170k).

Key Quotes

“Further, payroll gains in the previous two months were revised down a total of 38k. Abstracting from the reasons for why the March numbers came in below expectations, over the past three months, payrolls increased at an average pace of 178k, very close to the 182k average witnessed over the past year.”

“Another surprise today was the 0.2pp decline in the unemployment rate (UR), which came in at 4.5% (Nomura: 4.7%, Consensus: 4.7%). The March decline in the UR arose from an unusually strong and unexpected 472k gain in household employment, which followed a 447k gain in February. The labor force participation rate (LFPR) remained at 63.0%. Given that discouraged workers and part-time workers for economic reasons both declined in the month, the underemployment rate (U6) improved to 8.9% from 9.2%.  While data derived from the Household Survey are sometimes volatile due to a smaller sample size than the Establishment Survey, almost all elements of the household survey for March suggests further reduction in slack in labor markets.”

“Average weekly hours came in at 34.3 and the prior month was lowered to 34.3 (previously reported as 34.4). With this downwards revision, the aggregate working hours, a proxy of economic activity, increased only marginally by 0.1% m-o-m and the prior month was lowered to a 0.1% decline (previously reported as a 0.2% increase).”

“Average hourly earnings increased 0.2% (0.192%) m-o-m in March and rose 2.4% at an annual rate in Q1, a step down from the 2.8% pace in Q4.”

“Overall, slicing through the monthly volatility, the recent employment reports do not provide evidence that the broad-based enthusiasm reflected in various sentiment surveys has demonstrably boosted the labor market. Indeed, spending data (despite some monthly volatility) also have not accelerated materially, consistent with our Q1 GDP tracking estimate which hovered below 1.0%.”