US: Weather depresses payroll growth - Nomura

Analysts at Nomura note that US nonfarm payroll employment surprised to the downside in March, increasing only 103k (Nomura: 140k, Consensus: 185k).

Key Quotes

“Private payroll employment increased 102k with a 1k contribution from government. For Q1, monthly payroll gains averaged 202k, a strong pace. The extent to which fiscal policy changes have boosted economic activity remains unclear, but we expect to see positive effects soon.”

“Weather was a major factor in March as construction employment declined by 15k after increasing by 65k one month earlier. Employment growth in food services & drinking places, another weather-sensitive sector, also slowed to zero from 20k in February.”

“In addition, changing seasonal patterns that might have affected apparel CPI inflation may have also distorted retail trade employment. Retail employment growth has been volatile since November. In March, retail employment declined by 4k after a strong, 47k increase in February. Other service sector industries, however, also showed some softness with a slowdown in education & health, financial activities, other services, and professional & business services hiring activity.”

“That said, the six-month average growth in nonfarm payroll employment now stands at 211k, a strong reading, which was mostly led by the goods-producing sector and the FOMC will likely look through the weather-related slowdown in March.”

“Manufacturing employment growth, less affected by weather, showed a strong 22k gain (Nomura: 25k, Consensus: 22k). The manufacturing sector continues to contribute solidly to monthly employment growth. After averaging a monthly 1k loss during 2016, manufacturing employment has averaged a 19k gain over the past 12 months.”