Will nonfarm payroll growth continue to pick up? The three-month average nonfarm payroll employment rose to 68k as of March 2026, and the consensus for April is at 75k. However, given that the 'breakeven' pace of job growth, or the monthly job growth that’s required to keep the unemployment rate steady, is close to zero, it’s equally likely that we will get negative prints as it is to get positive prints. In turn, it’s hard to read too much into volatile job prints, and we think policymakers would still be comfortable staying on hold even if we have a negative print in April. Only consistent negative job prints that push up the unemployment rate will make policymakers more concerned.

Does the unemployment rate continue its remarkable stability? In a similar vein, we expect the unemployment rate to remain flat at around 4.3% in April and throughout the year. Monthly prints will vary slightly, given that the household survey that produces the unemployment rate has a larger margin of error, but 4.5% and above is the threshold we are watching for, since that level of unemployment has led to rate cuts in the past.

Does the labor force participation drop continue? The rate has declined sharply since November 2025, from 62.5% to 61.9%, and may continue to decline in 2026 as the population ages and older workers exit the labor force. A falling labor force participation rate will help mitigate any employment contraction and keep the unemployment rate steady (or even lower).

Does the employment-to-population ratio hover at its highs? The prime-age (25-54) employment-to-population ratio helps remove trends in the labor force and an aging population that may distort unemployment rates, making it a key indicator of labor market health. As of March 2026, the prime-age employment-to-population ratio remained at 80.7%, roughly where it has been in the last three years. A consistent employment-to-population ratio gives us greater confidence in labor market conditions despite the declining hiring rate.

Does the breadth of job growth remain narrow or broaden back out? One key reason we remain concerned about downside risks to the labor market is that job growth over the last two years has been concentrated in healthcare and education, two of the most non-cyclical sectors of the economy. In March, job growth in the goods-producing sector picked up after a net job loss in 2025, a welcome sign we want to see continue.

Does average hourly earnings continue to moderate? While we won’t get real average hourly earnings until CPI next week, nominal average hourly earnings are important because they matter a lot for aggregate consumer income, which is total employment times weekly hours worked times average hourly earnings. Given that employment growth will be more muted, a lot of aggregate consumer income growth will have to come from real wages. In turn, a sharp slowdown in real average hourly earnings growth, as we saw in March (0% year-over-year), if sustained, will continue to dampen consumer spending and increase downside risks to growth.