MNI DATA PREVIEW: US March Payrolls Seen +170k, Downside Bias

     WASHINGTON (MNI) - The median forecast in an MNI survey shows analysts

expect March nonfarm payrolls to rise by 170,000 a rebound from the

weaker-than-expect 20,000 February, but below the gains seen in December and

January. However, there is a strong bias toward another overestimate, so a

disappointing number is a possibility.

     Analysts in the MNI survey also expect average hourly earnings to rise

0.3%, the average workweek to rise to 34.5 hours from 34.4 hours in February,

and the unemployment rate to hold steady at 3.8%. The Bloomberg consensus looks

for a 175,000 payrolls gain, but for the same earnings, hours, and unemployment

rate results.

     Ahead of the release on Friday, we outline important themes for particular

attention.

     - Over the last 20 years, analysts have overestimated headline payrolls 12

times. High misses have occurred in eight of the last 10 years and six of the

last seven years, showing a clear bias toward an overestimate.

     - This month, markets are expecting headline payrolls to rise by 183,000, a

higher estimate than analysts' 170,000 forecast. In the last year, both markets

and analysts have an even split between overestimates and underestimates. As a

result, it is not clear who, if either, will be surprised this month.

     - Both markets and analysts are expecting average hourly earnings to rise

by 0.3% this month. In the last year, markets and analysts have had more of a

tendency to underestimate earnings, having done so six and five times

respectively, with a number of correct estimate in the remaining months. So

there is a possibility that earnings could exceed the 0.3% gain expected.

     - The ADP National Employment Report posted a gain of 129,000 jobs in

March, below the analyst forecast for a 165,000 private payrolls gain in the

official data. On its face, that suggests a downside risk for private payrolls

and, by extension, overall payrolls. However, the ADP report is known for having

a comparatively poor track record for predicting the BLS number, which limits

the degree of risk.

     - Other relevant employment data for March suggest robust payrolls growth

in the month. The Challenger Layoff Intentions report showed a decline in March

layoff intentions, though the Q1 total was the highest in 10 years. The ISM

employment measures increased in the month for both the manufacturing and

nonmanufacturing sectors.

     - If the analyst forecast for average hourly earnings is accurate, the 0.3%

monthly increase in earnings will maintain the year-over-year rate of wage

growth at 3.4%, barring revisions to the February number.

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

--MNI Washington Bureau; +1 (973) 494-2611; email: harrison.clarke@marketnews.com

--MNI Washington Bureau; +1 202-371-2121; email: shikha.dave@marketnews.com

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