The U.S. economy probably added 185,000 jobs last month as wage gains accelerated, a survey of economists showed, reinforcing the Federal Reserve's case for continuing to increase interest rates gradually to keep inflation from overheating.
The survey by data provider FactSet came ahead of a report on March employment due Friday from the Labor Department's Bureau of Labor Statistics. Investors have scrutinized recent employment reports for clues on whether the Fed might need to accelerate the pace of interest-rate hikes compared with officials' projections for two more quarter-point increases this year.
The expected growth in nonfarm payrolls would represent a slowdown from February's increase of 313,000 but would still be enough to reduce the unemployment rate to a 17-year low of 4%, from the 4.1% level reported last month, the survey showed. Average hourly earnings probably rose by 0.25% in March, faster than the prior month's increase of 0.1%. Such gains would leave wages up 2.7% over the past 12 months.
"The markets would view that quite positively, as a Goldilocks number," said Tony Bedikian, head of global markets for Providence, Rhode Island-based Citizens Bank. "It would be a number that shows consistent, continued strong payroll growth but not a sign of overheating, and not enough to get the Fed tightening more quickly."
The central bank's monetary-policy committee, led by Fed Chairman Jerome Powell, raised benchmark interest rates by a quarter point last month to a range between 1.5% to 1.75%. It was the sixth hike since late 2015, when the Fed ended its policy of holding rates close to zero to stimulate growth following the 2008 financial crisis.
While inflation, at around 1.7%, is still running below the Fed's target of 2%, Fed officials project that price increases will accelerate toward the mark this year and next. High inflation is considered bad for the economy, but persistently low inflation is usually seen as a sign of a sluggish economy.
In January, a report showing year-over-year wage growth accelerated to 2.9% triggered a stock-market selloff, as traders worried that the gains might push the Fed to raise rates faster.
Powell told U.S. lawmakers in a hearing in February that he believes "gradual" rate increases are warranted to keep the economy growing smoothly.