US: Unemployment rate to fall soon - Nomura

Analysts at Nomura continue to expect the US unemployment rate to fall into 3 percent territory over the next few months after it declined on an unrounded basis by 7bp but remained unchanged at 4.1% (4.071%) rounded.

Key Quotes

“Flows from employment to unemployment picked up unexpectedly in March, increasing 134k, despite subdued initial jobless claim readings. However, as we flagged in our employment preview, worker flows from nonparticipation to unemployment dropped sharply in March, contributing to some of the unrounded decline in the unemployment rate.”

“We continue to expect the unemployment rate to fall into 3 percent territory over the next few months, especially in light of the substantial amount of fiscal stimulus that will soon hit the economy. At this point, it is more a question of when and not if. However, the impact of fiscal policy on the supply side, i.e., labor force participation could also affect the pace of improvement in the unemployment rate.”

“The labor force participation rate (LFPR) ticked down 0.1pp to 62.9% after an outsized 0.3pp gain in February. Prime age (25-54) LFPR declined 0.1pp to 82.1%.”