U.S. March Nonfarm Payroll Preview: Even If Data Aligns with Expectations, Financial Markets May Not Escape the Fate of Volatility

TradingKey
Updated
Mitrade
coverImg
Source: DepositPhotos

On 4 April 2025, the United States will release its March Nonfarm Payrolls (NFP) data. The market consensus currently anticipates job growth of 128,000, a decline from February’s 151,000 (Figure 1). We align with this prevailing forecast.


Figure 1: U.S. labour market forecasts

altText

Source: Refinitiv, Tradingkey.com


Several factors suggest a weakening NFP report:


  • Economic Slowdown and Data Momentum: Recent months have shown a downward trend in nonfarm payrolls, driven by a broader economic slowdown. Employment growth has dropped from 256,000 in December last year to around 150,000 in January and February this year (Figure 2). Given the inherent inertia in economic data, a continued softening in March appears likely.

  • Leading Indicators Signal Weakness: The ISM Manufacturing Employment Index has declined for two consecutive months, while the ADP Employment Change—often dubbed the "mini-NFP"—has also seen a sharp drop recently (Figure 3). These two leading indicators reinforce the view that the U.S. labour market is losing steam.

  • Consumption and Production Feedback Loop: On the income and consumption front, slowing Personal Income growth has dragged the Michigan Consumer Sentiment Index lower for several months, alongside a decline in Retail Sales year-over-year growth from 4.2% in January to 3.1% in February (Figure 4). This consumption weakness has spilt over to the production side, with the March ISM Manufacturing PMI slipping below the 50 expansion-contraction threshold (Figure 5). This deteriorating consumption-production cycle may be the root cause of a weaker March NFP.

Figure 2: U.S. Nonfarm Payrolls (000)


altText

Source: Refinitiv, Tradingkey.com


Figure 3: Leading indicators of NFP


altText

Source: Refinitiv, Tradingkey.com


Figure 4: U.S. Personal Income and Michigan Consumer Sentiment Index


altText

Source: Refinitiv, Tradingkey.com


Figure 5: U.S. ISM Manufacturing PMI


altText

Source: Refinitiv, Tradingkey.com


Typically, if NFP data falls below consensus expectations, the U.S. dollar, Treasury yields and equities tend to decline post-release, while exceeding expectations lifts them. When data aligns with forecasts, financial markets usually remain stable. However, this time could be different. Amid the ongoing U.S. economic slowdown, unless the March NFP significantly outperforms expectations, we anticipate a short-term downturn in U.S. financial markets—even if the data merely meets the 128,000-job forecast.


Additionally, on 2 April at 3:00 PM Eastern Time, President Trump is set to announce a "reciprocal tariff" policy. Whether this tariff is targeted or broad-based, its nature is a double-edged sword, harming both the U.S. and its trading partners. With further tariff hikes now a certainty, we expect the U.S. labour market to remain under pressure in the coming months.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
Gold edges down amid clash over status of US-China trade talksGold price is on the back foot on Friday, almost erasing all of Thursday’s gains, and looks set to close off this week in the red.
Author  FXStreet
14 hours ago
Gold price is on the back foot on Friday, almost erasing all of Thursday’s gains, and looks set to close off this week in the red.
placeholder
Gold price consolidates in a range; bulls have the upper hand while above $3,300Gold price (XAU/USD) struggles to capitalize on the previous day's move higher and oscillates in a narrow trading band during the Asian session on Friday amid mixed fundamental cues.
Author  FXStreet
20 hours ago
Gold price (XAU/USD) struggles to capitalize on the previous day's move higher and oscillates in a narrow trading band during the Asian session on Friday amid mixed fundamental cues.
placeholder
Gold price surges past $3,300 on trade jitters, yield slump reviving haven demandGold price snapped two days of losses on Thursday and rose $50, or more than 1.50%, amid renewed concerns about the US-China trade war.
Author  FXStreet
20 hours ago
Gold price snapped two days of losses on Thursday and rose $50, or more than 1.50%, amid renewed concerns about the US-China trade war.
placeholder
Gold price snaps selling off after fresh Trump comments on tariffsGold price (XAU/USD) is turning positive, recovering above the $$3,300 level at the time of writing on Thursday after two days of firm selling pressure since it topped at $3,500 on Tuesday.
Author  FXStreet
Apr 24, Thu
Gold price (XAU/USD) is turning positive, recovering above the $$3,300 level at the time of writing on Thursday after two days of firm selling pressure since it topped at $3,500 on Tuesday.
placeholder
Gold price bulls could regain control amid fading US-China trade deal optimismGold price (XAU/USD) attracts fresh buyers during the Asian session on Thursday, reversing the previous day's heavy losses and snapping a two-day losing streak to the $3,260 area or the weekly low.
Author  FXStreet
Apr 24, Thu
Gold price (XAU/USD) attracts fresh buyers during the Asian session on Thursday, reversing the previous day's heavy losses and snapping a two-day losing streak to the $3,260 area or the weekly low.
Real-time Quote