Nonfarm payrolls were much softer than expected in March, rising only 126k against consensus (245k) expectations for a stronger print. There were also net downward revisions of 69k to the previous months of payrolls, bringing estimated payroll growth in February to 264k (from 295k) and January to 201k (from 239k).
"While the 126k rise in March payrolls was a disappointment relative to our expectation (250k), we do not view this as the new trend. We look for monthly payroll growth to average 200-225k over the remainder of the year as economic activity moderates to a more sustainable trend." - said Barclays Capital in a report on Friday
Earnings were the bright spot in this report. Average hourly earnings were up 0.3% m/m and 2.1% y/y, modestly outperforming expectations, while average earnings for production and non-supervisory employees was up 0.2% m/m and 1.8% y/y.
"We do not view faster wage growth as a precondition to Fed tightening, although more rapid wage growth would certainly make the committee's decision easier. In her public remarks, Fed Chair Yellen has said the decision to raise rates would, in part, be based on a forward-looking assessment of labor markets, saying that Fed policymakers need to be reasonably confident in their expectation that further improvement in labor markets would yield faster wage growth. We continue to forecast the first rate hike in September." - Barclays said
