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By Carlos Torres
March 10 (Bloomberg) -- U.S. employers probably added 210,000 jobs in February, the most in three months and enough to keep consumers spending and the economy growing, economists said before a government report today.
The February increase, the median estimate in a Bloomberg News survey of 77 economists, would follow a January gain of 193,000. The Labor Department report will probably show the unemployment rate held at a four-year low of 4.7 percent for a second month, according to the median estimate in the survey.
Economic expansion will depend more on job growth this year as housing, a source of strength in the last four years, starts to fade, economists said. Rising demand for workers is putting pressure on wages, posing a risk of higher inflation.
``The solid trend in payroll growth has been maintained into February,'' said John Ryding, chief U.S. economist at Bear Stearns & Co. in New York. ``Reduced labor market slack, illustrated by the decline in the unemployment rate since June 2003, appears to be putting upward pressure on wage increases.''
The Labor Department is scheduled to release its report at 8:30 a.m. in Washington. Forecasts for payroll growth ranged from 100,000 to 300,000 jobs. Estimates for the unemployment rate ranged from 4.6 percent to 4.9 percent.
Ten-year Treasuries headed for a third weekly decline and the dollar cemented its biggest weekly rally against the yen in six weeks before before the report's release as investors concluded rising wages and faster economic growth will prompt the Federal Reserve to raise rates three more times this year.
Dollar Rally
The yield on the benchmark 10-year note held at 4.73 percent as of 6:30 a.m. in London, according to bond broker Cantor Fitzgerald LP. It has gained 20 basis points, or 0.2 percentage point, in the past three weeks. The dollar traded at 118.41 yen at 7:18 a.m. in London, from 118.21 late yesterday in New York and 116.38 yen on March 3.
At 10 a.m., a report from the Commerce Department may show wholesale inventories rose 0.5 percent in January as businesses prepared for a pickup in consumer demand. At 2 p.m., a Treasury report may show the government's budget deficit swelled to $118.3 billion last month, surpassing February 2005's $113.9 billion as the biggest monthly shortfall on record.
Best Start Since 1999
The combined gain in employment in January and February would be the best start of any year since 1999. The 4.7 percent jobless rate in January was the lowest since July 2001.
Surveys in the last few weeks showed business executives are preparing to boost hiring and wages. Fifty-nine percent of U.S. firms plan to increase employment over the next 12 months, leading to a 2 percent gain in jobs, according to a Duke University survey of chief financial officers that was released this week.
Wages and salaries are likely to rise by 4.2 percent, the biggest increase forecast by the company officials in at least three years, the survey also showed.
The average hourly wage probably rose 0.3 percent last month, after a 0.4 percent gain in January, the Labor report will also show, according to economists surveyed. Average hourly wages rose 3.3 percent in the 12 months ended in January, the most in almost three years.
``With little excess capacity left in the labor market, we expect continued upward pressure on wages,'' said Joseph Abate, a senior economist at Lehman Brothers Inc. in New York.
Rising Salaries
Rising salaries will help consumers keep spending even as home prices moderate this year, economists said. Owners tapped into the rising value of their homes over the last few years in order to supplement incomes and keep spending.
The effect on consumer purchases from smaller gains in home prices ``is not likely to be a significant concern,'' St. Louis Federal Reserve Bank President William Poole said in a speech this week. ``The reason is that other economywide developments, especially income and employment growth, typically exert a much greater influence on the consumer's pocketbook and spending habits than does the state of the housing industry.''
February's employment report will be the last before Fed policy makers meet March 27-28. The central bank is forecast to raise its target interest rate to 4.75 percent from the current 4.5 percent to keep inflation from accelerating. It would be the 15th consecutive quarter-point increase since the Fed started its campaign in June 2004.
Money to Spend
U.S. companies ``have money to spend and are just looking for an excuse to spend it,'' John Edwardson, chief executive officer at CDW Corp., the largest U.S. independent direct seller of computers and software, said in a March 7 interview.
Vernon Hills, Illinois-based CDW, will boost the payroll at a Chicago sales center by almost 50 percent in the next five years and will double capacity after completing a new distribution center in Las Vegas this year, Edwardson said.
Economists are confident in forecasting employment gains as firings subside. An average 287,000 first-time claims for jobless benefits per week were filed last month, close to a five-year low.
``Low claims for unemployment insurance suggest that demand for labor is strong, and thus non-farm payrolls should expand briskly,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York.
Even economists expecting more subdued job gains last month said it was mainly due to poor weather. A snowstorm in the Northeast and more seasonable temperatures after the warmest January in a century probably restrained hiring, said David Greenlaw, chief U.S. fixed income economist at Morgan Stanley in New York. Greenlaw's forecast of a 100,000 increase in February payrolls was the lowest in the survey.
``Since we believe that the underlying state of the labor market is quite healthy, we would expect any negative weather- related impact on the February data to be recouped in March,'' Greenlaw said. The weather probably reduced payrolls by 100,000 last month, he said.
Bloomberg Survey
FIRM Nonfarm Unemploy Manu Avg Hrly
Payroll Rate Payroll Earnings
-------------------------------------------------------------
Number of replies 77 72 17 53
MEDIAN 210 4.7% 5 0.3%
AVERAGE 208 4.7% 7 0.3%
High Forecast 300 4.9% 15 0.4%
Low Forecast 100 4.6% 0 0.1%
Previous 193 4.7% 7 0.4%
-------------------------------------------------------------
ABN Amro 175 4.8% n/a n/a
4CAST Ltd. 225 4.7% n/a 0.2%
Action Economics 220 4.7% 5 0.2%
Alleti Gestielle SGR 195 4.8% 5 n/a
Ampega Asset Mang. 180 4.8% 8 n/a
Argus Research Corp. 105 4.7% n/a 0.4%
BBVA 215 4.8% n/a 0.3%
B of A Securities 190 4.8% n/a 0.3%
Bancolombia SA 217 n/a n/a n/a
Bantleon Bank AG 200 4.7% n/a n/a
Barclays Capital 200 4.7% n/a 0.3%
Bear Stearns 225 4.8% n/a 0.3%
Bank of Tokyo- Mitsub. 200 4.8% 10 0.2%
Briefing.com 190 4.8% n/a 0.3%
Calyon 215 4.7% n/a 0.3%
CantorViewpoint 202 4.7% n/a 0.3%
CIBC World Markets 210 4.8% n/a 0.2%
Citigroup 300 4.6% n/a 0.2%
ClearView Economics 275 4.7% 15 0.2%
Commerzbank 200 4.7% n/a 0.3%
Countrywide SEC 175 4.7% 8 0.3%
Credit Suisse 200 4.6% n/a 0.3%
Cube Financial 218 4.7% n/a n/a
Daiwa Securities 180 4.8% n/a n/a
Danske Bank 250 4.7% n/a n/a
DekaBank 180 4.8% 5 0.2%
Desjardins Group 220 4.7% n/a 0.2%
Deutsche Bank Research 175 4.7% n/a 0.3%
Deutsche PostBank 220 4.7% n/a n/a
Dresdner Kleinwort 125 4.8% 3 0.3%
DZ Bank 150 4.8% n/a 0.3%
Essen Hyp. 250 n/a n/a n/a
Exane 300 4.7% n/a 0.3%
FTN Financial 200 4.7% n/a 0.2%
First Trust Advisors 250 4.7% 15 0.4%
Fortis Bank NV 225 4.7% n/a n/a
Global Insight 220 4.8% n/a 0.3%
Goldman Sachs 225 4.7% n/a 0.3%
High Frequency Economics 200 4.8% n/a 0.3%
HSBC Markets 190 4.7% n/a 0.3%
HypoVereinsbank 220 4.9% n/a n/a
I.D.E.A. 210 4.8% 0 0.3%
ING Financial Markets 240 4.7% n/a 0.3%
Informa Global Markets 180 4.8% 5 0.2%
Insight Economics 225 4.7% n/a 0.2%
IntesaBci 190 4.8% n/a n/a
IXIS-CIB 220 4.8% n/a 0.2%
J.P. Morgan 200 4.7% n/a 0.2%
JPMorgan Asset Mg 225 4.8% n/a 0.3%
Landesbank BW 210 4.7% n/a n/a
Lehman Brothers 250 4.8% n/a 0.4%
Macroeconomic 200 4.8% n/a 0.3%
Merrill Lynch 180 4.7% n/a 0.3%
Mizuho Securities 195 4.8% n/a 0.2%
Moody's Economy.com 190 4.8% n/a 0.3%
Morgan Stanley 100 4.8% n/a 0.3%
National Bank Financial 225 4.8% n/a 0.4%
National City Bank 210 4.7% n/a 0.3%
Nesbitt Burns BMO 215 4.7% n/a 0.3%
Nomura 265 4.8% 5 0.2%
Nord/LB 230 4.8% n/a n/a
PNC Bank 210 4.7% 8 0.1%
RBC Capital Markets 250 n/a n/a n/a
RBS Greenwich Capital 180 4.7% n/a n/a
Regions Financial 175 4.8% 0 n/a
Ried, Thunberg & Co. 200 4.7% n/a n/a
Scotia Capital 220 n/a n/a n/a
Societe Generale 220 4.7% n/a n/a
Stone & McCarthy 300 4.7% 5 0.3%
Thomson/IFR 225 4.7% n/a 0.3%
Tullett Prebon 265 4.7% n/a 0.3%
UBS Securities LLC 125 4.8% 10 0.2%
Unicredit Banca Mobilare 175 4.7% 5 n/a
Wachovia 250 n/a n/a n/a
Wells Fargo 215 4.7% n/a 0.2%
Westpac Banking 180 4.7% n/a n/a
Wrightson 180 4.8% n/a 0.3%
To contact the report on this story: Carlos Torres in Washington at ctorres2@bloomberg.net
Last Updated: March 10, 2006 03:46 EST
