Very Strong February Increases Risk Of March Jobs Decline

March labour market data is published today and after the outsized 116.8k rise in new jobs in February there is a considerable risk that there will be a negative print. Bloomberg consensus is forecasting 10k new jobs, which would keep the 6-month average steady. February was the highest since the pandemic-affected November 2021 and was boosted by the timing of new starts around holidays and so some payback is possible.

• There will be a lot of uncertainty around this release and given recent volatility it may still be difficult to determine the underlying labour market trend. Given the economy is slowing, a moderation in the 6-month average would not be surprising.
• It is worth looking through individual months and focusing on averages, and so a negative print won’t necessarily signal a sharp weakening in the jobs market. A 20k drop in March brings the 6-month average to around 28k. A negative outcome would still leave the 6- and 12-month averages around recent trends.
• Usually when there are outsized outcomes, there is some payback over the following month or months. Even if new jobs aren’t negative, they’re then close to flat.
• Given February’s very strong reading, a rise in new jobs above consensus’ 10k would signal that despite lacklustre growth, the labour market strengthened considerably in Q1 2024 after easing over H2 2023. Even with a 40k drop, lower end of consensus, 92k new jobs would have been created in Q1 up from 53k in Q4.