US non-farm payrolls report eyed as Federal Reserve considers next rate hike

By Renae Dyer / April 05, 2018 / www.proactiveinvestors.co.uk / Article Link

The US Labor Department's official jobs data for March has a tough act to follow.

Last month's US non-farm payrolls report showed employers added a much bigger-than-expected 313,000 jobs in February.

Economists had forecast payroll growth of 200,000.

A strong labour market contributed the Federal Reserve's decision to raise interest rates last month by a quarter percentage point to a range of 1.5% to 1.75%.

The Fed signalled that it is on track to raise interest rates twice more in 2018 so a solid jobs report on Friday is likely to support these expectations.

"While the monthly jobs report is routinely among the most important high-frequency releases, the March reading will be particularly significant given the acute market focus on whether the Fed is at risk of falling behind the curve in terms of policy normalisation," said Naeem Aslam, chief market analyst at Think Markets UK.

Friday's report is expected to reveal 185,000 jobs were added in March while the unemployment rate is forecast to fall to 4.0% from 4.1%.

Economists anticipate average hourly earnings growth will accelerate to 2.7% year-on-year in March from 2.6% a month earlier and month-on-month growth will rise to 0.3% from 0.1%.

"Net job gains have been on a tear in recent months, surprising significantly to the upside in February with a 313,000 jump, following an upwardly revised gain of 239,000 in January," said Morgan Stanley, adding that it expects job growth to moderate in March.

Morgan Stanley also sees the labor force participation rate falling to 62.8% in March from 63.0% in February when it rose by 0.3 percentage points.

Significant announcements due:

Finals: Pacific Industrial & Logistics REIT (LON:PILR)

Trading statements: Motorpoint Group (LON:MOTR)

AGM: XP Power Ltd (LON:XPP)

Economic data: US non-farm payrolls report; US consumer credit numbers

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