All Eyes on March NFP – Labour Market at a Crossroads
Article published on April 4th, 2025 2:00AM UK Time
Markets are firmly focused on the upcoming US Nonfarm Payrolls (NFP) report, with the March jobs data poised to test the resilience of the US labour market and to likely shape the outlook for Federal Reserve policy heading into Q2.
The current consensus expects the US economy to have added 140,000 jobs in March, a slowdown from 151,000 in February, and below the 3-month average of 200,000. This would mark a clear loss of hiring momentum, although private sector job creation remains steady, and broader indicators continue to suggest a softening, not collapsing, labour market.
Key Expectations for the March Jobs Report
📊 Headline NFP:
- Expected: +140k
- Prior: +151k
- Averages:
- 3-month: +200k
- 6-month: +191k
- 12-month: +162k
📉 Unemployment Rate:
- Expected to remain steady at 4.1% from 4.1% prior
- Fed’s latest SEP projections:
- 2024: 4.4%
- 2025: 4.3%
- Long-run: 4.2%
💰 Average Hourly Earnings:
- Expected: +0.3% M/M, in line with February
⏱ Average Workweek Hours:
- Expected to tick up to 34.2 hours from 34.1
Labour Market Is Cooling, But Not Collapsing
Private sector hiring is holding firm, averaging 169k over the past three months, suggesting that the underlying labour market remains resilient enough to absorb short-term public sector shocks. However,private businesses in the US only added 77K workers to their payrolls in February 2025, which has been the smallest increase in seven months.
Fed Chair Powell to Speak Post-Release
Adding further weight to the print, Fed Chair Jerome Powell is due to speak at a business journalism conference shortly after the NFP release.
At the March FOMC press conference, Powell said:
- The labour market remains “in balance”.
- Conditions are solid, and employment is not a source of inflationary pressure.
- The Fed is ready to ease policy if the labour market weakens significantly.
Any deviation in Friday’s report—either a big downside surprise or signs of wage-driven inflation—will likely shape his tone and message during that appearance.
Market Implications: Reaction Scenarios
📉 Soft NFP Print (Jobs <100k, UR ≥ 4.2%)
- Yields fall, as market confidence in a June cut grows
- USD weakens, particularly vs. EUR
- Fed cut expectations accelerate; markets may price in >75bps for 2024
📈 Strong NFP Print (Jobs >250k, UR ≤ 4.0%)
- USD rallies, as labour resilience delays Fed easing
- Yields rise, tightening financial conditions
- Rate cut bets get pushed out, possibly into Q3
Final Thoughts: Labour Data Will Drive the Narrative
💡 Bottom Line: Friday’s NFP release will be a pivotal test of the Fed’s “wait-and-see” approach. With inflation appearing to stabilise, the labour market is now the key swing factor for rate cut timing. A cool but not collapsing print will likely reinforce the Fed’s preference to stay patient, but a sharp downside surprise would bring July—or even June—rate cuts sharply back into focus.