US: NFP expected to increase at an above-trend pace of 220k in April - Nomura

After a weather-related soft reading of a 103k increase in March, analysts at expect US nonfarm payroll employment to increase at an above-trend pace of 220k in April.

Key Quotes

“Despite the soft reading last month, nonfarm employment growth so far in Q1 2018 has been solid, averaging a 202k gain per month. Our private payroll forecast is for a 210k increase, implying a 10k gain in government employment. Our forecast assumes some rebound in weather-sensitive industries in April, although colder-than-usual temperatures may attenuate the total amount of positive payback.”

“In addition, incoming labor market data have been strong. Initial jobless claims remained low during the BLS survey week for the April report. The Conference Board’s labor differential stayed near multi-year highs. Partly due to calendar effects, we expect average hourly earnings (AHE) to increase 0.27% m-o-m in April, bringing the year-on-year rate to 2.76%.”

“Finally, we expect the unemployment rate to decline about 0.1pp to 4.0%. The unemployment rate in March was at 4.07%. The steady pace of job growth so far this year should be sufficient to remove additional slack from the labor market and lower the rounded unemployment rate to 4.0%.”