Preview: Due May 3 - U.S. April Employment (Non-Farm Payrolls) - Still strong if a little less so, earnings may be above trend
We expect a 255k increase in April’s non-farm payroll, still strong if the slowest since November, with a 195k increase in the private sector. We expect an unchanged unemployment rate of 3.8% and a slightly above trend 0.4% increase in average hourly earnings, lifted by a minimum wage hike in California.
Non-farm payroll trend had been gradually slowing until November 2023, when the 3-month average reached 198k and the 6-month average was 205k. They have since risen to 276k and 244k respectively, putting our 255k forecast in between. Our forecast would be only marginally above January’s 256k rise overall and 196k in the private sector, a month where bad weather may have provided some restraint.
Initial claims give no hint of labor market slowing, but a few surveys have softened in April. April payrolls could see some restraint from tougher seasonal adjustments, though probably not a large one, as improving labor supply allows the creation of seasonal jobs. Construction may take a small hit from rising mortgage rates but manufacturing signals are picking up. A 60k positive contribution from government would be in line with recent trend.
Average hourly earnings trend seems to be around 0.3% per month, if a little above rather than below. This month could come in above tend due to a large increase in the minimum wage for fast food workers in California. This would see yr/yr growth correct higher to 4.2% from 4.1%.
We expect unemployment to be unchanged at 3.8% as the labor force comes close to matching a healthy rise in employment. March data did see the household survey, which calculates the unemployment rate, outperforming non-farm payroll growth, but trend in household survey employment has been a little softer than that of non-farm payrolls.
We expect an unchanged workweek at 34.4 hours though slippage back to February’s 34.3 is more likely than a third straight acceleration. January’s 34.2 was probably depressed by bad weather.