Investors looking to take a pulse of the U.S. economic recovery are zeroing in on Friday’s official nonfarm payrolls report, arguably the most closely-watch data release of the month.
Analysts polled by Bloomberg News expect Friday’s report to show the creation of 178,000 nonfarm jobs in March, following a much stronger than expected 235,000 in February. The unemployment rate is forecast to hold steady at 4.7%. Average hourly earnings should come in at 0.3% month-on-month, according to the census forecast.
However, market participants have higher expectations for Friday’s report after data from ADP Inc. showed another strong month of private sector hiring. U.S. employers in the private sector added 263,000 workers to payrolls last month, far exceeding analysts’ estimate of 187,000. The February number was revised down to reflect a gain of 245,000 from a previously reported 298,000.
With the gain, the U.S. economy has added more than 200,000 jobs in nine of the past 12 months, based on ADP data.
ADP figures are released 48 hours before the official nonfarm payrolls report, and are usually an accurate reflection of what to expect Friday morning.
With the economy at full employment, the Federal Reserve is looking to normalize monetary policy in the coming years. The U.S. central bank voted to raise interest rates in March for the second time in three meetings. The minutes of the official policy meeting, which were released Wednesday, reiterated the Fed’s outlook for three rate increases this year.
The minutes also disclosed plans to start shrinking the central bank’s $4.5 balance sheet later this year. To support stability following the financial crisis, the Fed poured trillions of dollars into the economy. Nearly a decade later, officials are finally ready to normalize monetary policy.
Friday’s nonfarm payrolls report could potentially spark a reaction from currency and equity traders. Assets and currency pairs tied to the U.S. dollar will be especially sensitive to fluctuations.
Markets will also be busy earlier in the day amid a steady stream of European releases. Germany will report on its February trade balance Friday. The United Kingdom will release official trade and industrial production figures during the same session.
The NFP report will be released Friday morning at 8:30 a.m. ET.
 ADP Research Institute (April 5, 2017). ADP National Employment Report: March 2017.
 Sam Bourgi (April 5, 2017). Dow Jones (DJIA) Futures Reverse Gains in Final Hour as Fed Raises Alarm on Trump Rally.” Economic Calendar.