Trying to call Friday's payroll number is proving tricky for U.S. economists, particularly after their fairly sizable gaffes in January and February, two months whose seasonal adjustments should have made the forecast more manageable.
That's bad news for stock and bond traders, both of whom are likely to be vulnerable if the number constitutes a major surprise.
Economists are predicting that 225,000 new jobs were created last month. The estimate is the same as the one heading into February's report, which ended up showing a 262,000-job addition. In January, economists were predicting 200,000 added jobs, while the unrevised number was plus 146,000.
"I do not have a gut feeling or prediction of what the nonfarm number will be," said Paul Mendelsohn, chief investment strategist at Windham Financial Services.
One problem with predicting March is the relative paucity of available data. Economists usually have the national Institute for Supply Management's employment index to work with, but because Friday is the first of the month, that indicator isn't yet available.
Two other traditional tells point in opposite directions. On Thursday, the Labor Department said that jobless claims increased 20,000 to 350,000 for the week ended March 26. The consensus had been for a decline to 320,000. The four-week moving average increased 8,500 to 336,000.
But the Chicago PMI index rose to 69.2% for March, much higher than the consensus of 60.4%. Economists had expected a decrease due to the surge in oil prices.
"We are looking for around 215,000 new jobs created, which is a little below consensus but still a strong number," said Michael Gregory, senior economist at Harris Nesbitt. "We see from recent economic data that job growth is picking up, businesses are hiring again, but the hiring seems to be more of a restrained type of growth right now."
Others are less sanguine. Richard Yamarone, director of economic research at Argus Research believes the consensus doesn't allow for enough potential downside from high energy prices.
"There are absolutely no signs in the past month that show we have added 225,000 new jobs," Yamarone said. "We are in another oil-induced soft patch and recently coming off 24-year highs in commodities. You have to put yourself in the businesses' shoes. How can you add to the bottom line when everyone believes that economic activity is slowing down?"
"The weak January numbers and strong February numbers basically cancel each other out," said Yamarone.
One thing that most investors agree on is that the release will have a dramatic impact on the financial markets. Too strong a number could easily push the yield on the 10-year Treasury bond through the key 4.62% resistance level. After an initial spike in the stock futures market, equities might trade down due to the hedging that is taking place in the bond market.
Conversely, a number significantly below consensus might push the yield on the 10-year much lower to its support level of 4.42%. Stock futures would probably gap lower on such news.
While "a number of 200,000 to 225,000 could have another 'Goldilocks' effect on the markets," says Gregory, "an extreme number above consensus would not be good for the market. The wage pressure could put real pressure on the bond market. Margins would get squeezed as employers dealt with trying to pass on rising cost."
"Traders are squaring away positions before tomorrow's release; nobody wants to be too much off base one way or another," said Mendelsohn. "The market will be looking to the claims for direction."