The United States will release its March Nonfarm Payrolls (NFP) report on Friday at 12:30 GMT. This data is closely followed because it gives a clear picture of the job market and helps investors understand what the Federal Reserve might do next on interest rates.
That said, market activity could stay quiet as the release falls on Good Friday, when trading volumes are usually lower.
Modest Job Growth Expected After February Decline
Economists expect the US economy to add around 60,000 jobs in March. This would mark a recovery after February saw a decline of 92,000 jobs, which surprised many.
The unemployment rate is likely to remain unchanged at 4.4%. Wage growth is also expected to stay steady, with average hourly earnings rising about 3.8% compared to last year.
Some analysts are more cautious. TD Securities expects job growth to come in closer to 30,000. They believe earlier disruptions, such as bad weather and strikes, may have distorted previous figures.
They also point out that hiring in healthcare could remain strong, while wage growth may slow slightly on a monthly basis.
Recent Data Shows Mixed Labour Market Signals
Other recent reports show a mixed trend in the job market.
Private payroll data from ADP showed a gain of 62,000 jobs in March, suggesting that hiring is continuing but not evenly across all sectors. Healthcare remains one of the stronger areas.
At the same time, the manufacturing sector is still struggling. The ISM employment index came in below 50, which indicates contraction in factory jobs.
Danske Bank also expects weaker job growth and warns that the unemployment rate could rise slightly to 4.5%. According to them, fewer job postings and slower hiring point to a cooling labour market.
Dollar Strength and Fed Uncertainty
The US Dollar performed well in March, supported by cautious market sentiment and rising oil prices, which increased concerns about inflation.
Federal Reserve Chair Jerome Powell recently said the central bank is in a position to wait and assess the situation. He also noted that job creation has slowed and entering the job market has become more difficult.
New York Fed President John Williams added that weak hiring trends may be affecting overall confidence in the economy.
Interest Rate Outlook Remains Unclear
Markets currently expect the Federal Reserve to keep interest rates unchanged in the coming months. There is now a strong belief that rates will stay within the 3.5% to 3.75% range through 2026.
This marks a shift from earlier expectations, when many believed the Fed would cut rates this year.
What to Watch in the NFP Report
If job growth comes in stronger than expected, especially above 70,000, it could support the US Dollar and raise the chances of tighter policy.
On the other hand, a weaker number below 50,000, especially if unemployment rises, could put pressure on the dollar and support the euro.
Still, other factors like oil prices and global tensions may continue to influence the market, regardless of the data.
