The monthly jobs report may be the single most important data release for judging the health of the labor market. Last month, the Bureau of Labor Statistics reported the U.S. economy added just 98,000 jobs in March, well below the recent trend of about 200,000 new jobs per month. Consumer spending, supported by growth in jobs and income, has been a major driver of the economy in recent years (first quarter notwithstanding).  Any change in the outlook for jobs and income would be a significant risk to the economic expansion.

Current consensus for the April report is a gain of 185,000 new jobs.  Labor market indicators available ahead of the Friday BLS report paint a mixed picture. The Institute for Supply Management surveys of the manufacturing and nonmanufacturing sectors suggest hiring in April remained positive but the pace may be quite modest. The Employment index for manufacturing came in at 52.0, down from 58.9 in March and the lowest reading since October 2016 (results above 50 suggests gains in employment while results below 50 suggest declines). For the nonmanufacturing sector, the employment index fell to 51.4 from 51.6 in March, the lowest since August 2016.

Initial claims for unemployment insurance, a measure of layoff activity, rose to 257,000 in the most recent reporting period, the second straight weekly increase.  However, that is still a very low level of layoff activity historically. The Job opening and labor turnover survey (JOLTS) from BLS estimated 5.7 million open positions in the U.S. as of February.

Sentiment surveys of consumers show the labor market differential, the percentage of consumer who say jobs are plentiful minus the percentage of consumer who say jobs are hard to get, is above the peak levels seen in the last economic expansion while the National Federation of Independent Business, a trade group representing small business, shows a relatively high percentage of small businesses planning on increasing employment.

On balance, the available labor market indicators still slant towards a positive outlook for jobs but Friday’s employment report, including any revisions to prior months, will be particularly important to the economic outlook. Upward revisions to prior months would be favorable signs and new job creation of at least 150,000 for April, especially if combined with healthy earnings increases, would continue to support future consumer spending. Conversely, a weak jobs report, a low level of job creation combined with weak earnings growth could begin to raise serious concerns for the expansion.