​​​​April US non-farm payrolls Report 2024: wage growth cools but overall growth strong

​​​250K jobs expected to be added in April

​After a solid report in March, the April figures should again point to the labour market remaining tight, with a strong pace of job growth set to be coupled with cooling earnings pressures and historically low unemployment.

​Headline non-farm payrolls (NFP) are expected to have risen by around 250,000 jobs last month, somewhat below the 303,000 pace seen in March. Nevertheless, a print in line with consensus would be roughly in line with the 'breakeven' rate required to maintain employment growth in pace with labour force expansion.

​Downside risk baked in to leading indicators

​While the usual range of leading labour market indicators is not fully available ahead of the April report, the 'flash' S&P purchasing managers indexes (PMIs) pointed to an overall decline in employment for the first time since June 2020. This presents a modest downside risk to the payrolls print. However, the weekly jobless claims figures remained largely unchanged from March to April, offsetting some of these concerns.

​Earnings growth to slow again

​Average hourly earnings are forecast to have risen by 0.3% month-over-month (MoM) in April, broadly in line with March. However, on an annual basis, tougher comparisons should see the yearly rate of earnings growth tick lower to around 4.0%. This would represent a continued cooling of wage pressures compatible with the Federal Reserve's (Fed) 2% inflation target.

​Overall unemployment rate holds steady

​The unemployment rate is likely to have remained at 3.8% in April, sticking within the narrow range of recent months reflecting a labour market running tight and close to full employment. Meanwhile, labour force participation could see a further uptick to account for rising immigration levels.

​Fed to stay the course even with strong payroll report

​While another strong jobs report would reinforce the robustness of the US labour market, its policy implications for the Fed are likely to be limited for now. Fed Chair Powell has indicated that an unexpectedly weak jobs market could prompt greater policy support, but a solid report alone would not deter plans for policy normalization. Incoming inflation figures like the May consumer price index (CPI) report are seen as more crucial for determining when the Fed starts cutting rates.

​Risk of payroll misses dominates investor worries

​In terms of market reaction, any significant downside in equities is expected to be limited even on a strong jobs number, given the tight labour market's implications for consumer spending and corporate earnings. However, a weaker-than-expected payrolls print could spur a more pronounced dovish market repricing, with gains for equities, Treasuries, and dollar weakness. This reflects how recent Fed repricing has drastically reduced rate cut pricing for 2024.