March US NFP & Unemployment Rate

US NFP Preview:

• Consensus forecasts are looking for jobs growth of +490K while the unemployment rate (U3) is anticipated to drop to 3.8% from 3.9%, a new low post-pandemic.
• As Fed officials have been strongly hinting at a 50-bps rate hike at the next meeting, the path of interest rates may already be set regardless of the March US jobs report.
• Will the March US jobs report change the Federal Reserve’s rate hike path? We’ll discuss these questions and more in context of the March US nonfarm payrolls report starting at 8:20 EDT/12:20 GMT. You can join live by watching the stream at the top of this note.

US Jobs Data Expectations, Impact

A continued drop in COVID-19 omicron variant infections likely served as a tailwind for US jobs growth in March, evidenced by US jobless claims dropping back to multi-decade lows in recent weeks.

According to a Bloomberg News survey, the US economy added +490K jobs in March from +678K jobs in February, with the US unemployment rate (U3) falling from 3.8% to 3.7%. The US participation rate is expected to edge higher to 62.4% from 62.3%, while US average hourly earnings are anticipated to come in at +5.5% y/y from 5.1% y/y.

But the March US NFP report is unlikely to change the Fed’s course towards rate hikes in the coming months, as Fed officials have repeatedly said that the US labor market is strong enough to withstand aggressive tightening. The impact on the US Dollar (via the DXY Index) may be constrained, insofar as the recent range appears likely to hold around the data release.

Atlanta Fed Jobs Growth Calculator (March 2022) (Chart 1)

The US economy continues to make steady progress towards ‘full employment’ as experienced pre-pandemic. According to the Atlanta Fed Jobs Growth Calculator, the US economy needs +335K jobs growth per month over the next 12-months in order to return to the pre-pandemic US labor market of a 3.5% unemployment rate (U3) with a 63.4% labor force participation rate.

We’ll discuss these questions and more in context of the March US nonfarm payrolls report starting at 8:20 EDT/13:20 GMT. You can join live by watching the stream at the top of this note.

— Written by Christopher Vecchio, CFA, Senior Strategist