U.S. March jobs data may be affected by severe weather, slowdown likely to be temporary

U.S. non-farm payrolls data scheduled for release this Friday may probably be significantly affected by the severe weather conditions. The March report is expected to be somewhat weaker compared to February, but this should only be seen as a temporary effect from the weather.

"We estimate non-farm payrolls increased by 160,000 in March, a bit below the consensus estimate of 175,000. We estimate the unemployment remained at 4.7% and average hourly earnings increased 0.2% m/m, implying an increase in the wage growth rate of 2.7% y/y," said Danske Bank in a report.

The Fed continues to watch labour market conditions as it highlights the importance in determining the hiking pace. The effect from weather is likely to be temporary and as growth picks up from the slowdown in H1 16, jobs growth is likely to continue at solid levels in coming months. The Fed is likely to look past a disappointing jobs report for March.

"We expect the Fed to hike two more times this year, in July and December, as the Fed seems less worried about inflation and has increased its weigh on labour market and growth data," said Danske Bank in a report.