April Payrolls Preview And Market Reaction Matrix: A Slowdown But How Big

The rate of payrolls growth is expected to slow in April, while wages are also seen easing, and the unemployment rate is likely to be unchanged. As Newsquawk notes, labor market proxies suggest a cooling in payrolls growth: weekly initial jobless claims were unchanged vs the comparable survey week in March, though continuing claims ticked up; manufacturing employment has been in contraction for seven straight months, according to the ISM, while S&P Global’s PMI series notes weakness in services sector employment conditions. That said, the ADP’s gauge of payrolls printed an upside surprise in April, though analysts remain skeptical about its predictive power for the official nonfarm payrolls report. It would take significant, unexpected weakness in the labour market to prompt Fed officials to become concerned, but a headline miss and cooling wage pressures could embolden rate cut bets, according to analysts.

EXPECTATIONS:

• The consensus looks for 240k nonfarm payrolls to be added to the US economy in April (prev. 303k; vs 3mth average of 276k, 6mth average of 244k, and 12mth average of 244k), although the distribution is oddly bimodal, with peaks at 200k and 255k.
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