The busy first week in May finishes with the monthly jobs report out of the US. Estimates for the headline non-farm payrolls for the month of April have ticked up this week on the back of stronger-than-expected ADP figures. Wednesday’s FOMC tone has also added to sentiment that the labour market remains strong and is a key factor in officials’ decision making.
The US economy is expected to have added around 180k jobs which would be below the three-month average of 345k. Surveys point to a continued downtrend in job creation which may push up the unemployment rate in the coming months. That is still very low in historical terms. Weekly initial jobless claims have also been rising which could signal some easing in labour supply. Earnings growth is forecast to slowly recede back to average, though there may be temporary distortions in this release.
We note that that there has only been a single month in the past year in which consensus overestimated growth in payrolls, which was March 2022. There is currently a clear pattern whereby the consensus headline figure has materially underestimated job growth over an extended period of time.
The dollar has resumed its downward trend after yesterday’s FOMC meeting. The Fed says it will be data dependent and use a meeting-by-meeting approach. But the regional banking crisis flared up overnight with another bank looking at its strategic options. This should keep the greenback on the back foot, even if the jobs report surprises to the upside. A hard landing for the economy and more job losses could become alot more likely as credit and lending tightens further.
Here are the numbers to know for this month’s NFP:
