April job gains could be way better than expected if one forecast is right

The April jobs report could come with a big surprise for the economy if an estimate from Bank of America Merrill Lynch pans out.

With the much-awaited nonfarm payrolls report still eight days away, BofAML economists already are forecasting a big upside surprise. They see job expansion of 250,000, ahead of the current Dow Jones estimate of 196,000 for what would be the best since January's 312,000. A gain of that much would be the best April since 2015.

The number actually could turn out even bigger: A tracker that the bank uses is seeing private payrolls rising 335,000.

Since the economists have been using the proprietary measure, dating to May 2008, there have been just three occasions when the private payroll growth indicated above 300,000. Those instances saw jobs gain an average 274,000, according to the estimates from the Bureau of Labor Statistics.

If the BofAML forecast, from U.S. economists Joseph Song and Michelle Meyer, is correct, that would take the average monthly job gains this year to about 198,000. The year has seen volatile monthly job gains, with increases as big as the January boom and as low as 33,000 in February.

The bank's economists also based their estimate on manufacturing surveys from the New York and Philadelphia Federal Reserve districts as well as the Duke University CFO business reading, which "showed that businesses expect full-time employment growth to accelerate over the next 12 months."

The Duke report for March — the most recent results in the quarterly survey — indicated expected employment growth of 4.6% over the next 12 months, well ahead of the 3% forecast in March 2018 and the 3.6% projected from December 2018.

Weekly jobless claims also have been indicating a strong labor market, though the level rose in numbers reported Thursday to the biggest jump in 19 months. However, on a rolling four-week average, claims are at 206,000, the lowest since late-1969.

Song and Meyer also project the unemployment rate dropping one-tenth of a percentage point to 3.7%. That would tie for the lowest jobless level since December 1969. The forecast also sees better wage growth, rising to 3.3% year over year from the 3.2% in March.

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