Payrolls Probably Rebounded in February as U.S. Economy, Weather Improved

Payroll gains in the U.S. probably accelerated in February, spurred by an improving economy and more seasonable temperatures, economists said ahead of a government report today.

Employment increased by 196,000 workers last month, the most since May, after a 36,000 gain in January, when winter storms depressed the count, according to the median forecast of 84 economists surveyed by Bloomberg News. The report may also show the jobless rate increased to 9.1 percent from 9 percent.

Bigger, sustained monthly payroll gains would underscore Federal Reserve Chairman Ben S. Bernanke’s testimony to Congress this week that there are “grounds for optimism” about the labor market in coming months. Employment growth and the resulting increases in income and confidence are contributing to sales improvements at companies like J.C. Penney Co. and Macy’s Inc. (M)

“The labor market has passed an important threshold and is starting to create a good number of jobs,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “It’s partly a snow-related rebound, but I think there’s some real substance there. We’re looking for jobs to run 200,000 plus in coming months as the recovery reaches the self- sustainable stage.”

The Labor Department figures are due at 8:30 a.m. in Washington. Bloomberg payroll survey forecasts ranged from gains of 100,000 to 297,000.

Weather’s Influence

Nationwide, temperatures during the week of the February employment survey were near normal, except for the central and southern Great Plains, according to National Weather Service. In contrast, economists said a storm that spread from the Midwest and the South to New England during the prior month’s survey week likely depressed January numbers as businesses temporarily closed.

The bad weather reduced January payrolls by about 100,000 workers, said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. He said those jobs are likely to be captured in the February payrolls report.

Private payrolls, which exclude government workers, probably rose by 200,000 last month, the most since April, according to the Bloomberg survey. Companies added 50,000 workers in January, the smallest gain in eight months, the Labor Department said on Feb. 4.

The projected increase in the jobless rate would mean it has been 9 percent or higher for 22 consecutive months, the longest stretch at such elevated levels since monthly records began in 1948. At the same time, the rate has dropped 0.8 percentage point over the past two months, the biggest decrease in such a short period since 1958.

Bernanke’s View

The labor market “has improved only slowly” and it may take “several years” for the unemployment rate to reach a “more normal level,” Bernanke said March 1 during testimony before the Senate Banking Committee.

Still, “we do see some grounds for optimism about the job market over the next few quarters, including notable declines in the unemployment rate in December and January, a drop in new claims for unemployment insurance, and an improvement in firms’ hiring plans,” Bernanke said.

President Barack Obama last week told the first meeting of his panel of outside economic advisers that the U.S. must deal with stubbornly high unemployment even as the recovery is well under way.

J.C. Penney, Macy’s and Ross Stores Inc. (ROST) were among retailers yesterday reporting February same-store sales that topped analysts’ estimates. Purchases at stores open at least a year climbed 6.4 percent at J.C. Penney, 5.8 percent at Macy’s and 3 percent at Ross, company data showed.

Retailer ‘Encouraged’

“We are encouraged by our solid start to the year,” Michael Balmuth, chief executive officer of Pleasanton, California-based discounter Ross Stores, said in a statement. Even so, “the much more important March/April holiday selling period is still ahead.”

Manufacturing remains a bulwark to the expansion. Orders to U.S. factories probably rose 2 percent in January, the most since September, economists said ahead of a report from the Commerce Department in Washington due at 10 a.m.

The jobs report will show factory employment climbed by 25,000 workers last month after a 49,000 gain in January, the biggest increase since August 1998, according to the Bloomberg survey median.

Shares of manufacturers in the past year have outperformed the broader market. The Standard & Poor’s Machinery Index has increased 50 percent, compared with a 19 percent gain in the S&P 500 Index. (SPX)

Job gains are broadening out to include retailers and manufacturers. Intel Corp. (INTC), the world’s largest chipmaker, and Home Depot Inc. (HD) are among U.S. companies that announced plans last month to hire thousands of new workers.

                         Bloomberg Survey

==============================================================
                           Nonfarm  Private     Manu Unemploy
                          Payrolls Payrolls Payrolls     Rate
                            ,000’s   ,000’s   ,000’s        %
==============================================================

Date of Release              03/04    03/04    03/04    03/04
Observation Period            Feb.     Feb.     Feb.     Feb.
--------------------------------------------------------------
Median                         196      200       25     9.1%
Average                        192      203       27     9.1%
High Forecast                  297      295       55     9.4%
Low Forecast                   100      130        0     8.9%
Number of Participants          84       38       22       80
Previous                        36       50       49     9.0%
--------------------------------------------------------------
4CAST Ltd.                     145      155     ---      9.1%
ABN Amro Inc.                  190      200     ---      9.1%
Action Economics               210     ---        30     9.1%
Aletti Gestielle               195      208       10     9.0%
Ameriprise Financial           175      182       45     9.1%
Banesto                        225     ---      ---      ---
Bank of Tokyo- Mitsubishi      172      188       55     9.0%
Barclays Capital               200      215     ---      9.0%
Bayerische Landesbank          200     ---      ---      9.2%
BBVA                           185      195     ---      9.0%
BMO Capital Markets            200     ---      ---      9.2%
BNP Paribas                    175     ---      ---      9.2%
BofA Merrill Lynch             240      250     ---      9.2%
Briefing.com                   200      220     ---      9.2%
Capital Economics              250     ---      ---      9.2%
CIBC World Markets             215     ---      ---      9.1%
Citi                           180      195       30     9.2%
Commerzbank AG                 200     ---      ---      9.1%
Credit Agricole CIB            215     ---      ---      9.1%
Credit Suisse                  200      220     ---      9.2%
Daiwa Securities America       125     ---      ---      ---
Danske Bank                    160     ---      ---      9.0%
DekaBank                       160     ---      ---      9.2%
Deutsche Bank Securities       250     ---      ---      8.9%
Deutsche Postbank AG           150     ---      ---      9.1%
Exane                          250     ---      ---      9.2%
Fact & Opinion Economics       200      215     ---      9.0%
First Trust Advisors           275      295       22     9.0%
FTN Financial                  100     ---      ---      9.1%
Goldman, Sachs & Co.           200     ---      ---      9.1%
Helaba                         225     ---      ---      9.1%
High Frequency Economics       200      225     ---      9.2%
Horizon Investments            230     ---      ---      9.3%
Hugh Johnson Advisors          130     ---        10     9.4%
Ibersecurities                 161     ---      ---      ---
IDEAglobal                     200      210       40     9.1%
IHS Global Insight             190     ---      ---      9.2%
Informa Global Markets         160     ---        20     9.2%
ING Financial Markets          150      200       35     9.0%
Insight Economics              175     ---      ---      9.3%
Intesa-SanPaulo                160     ---      ---      9.1%
J.P. Morgan Chase              200      215       50     9.1%
Janney Montgomery Scott        189      197       25     9.1%
Jefferies & Co.                160     ---        15     9.0%
Landesbank Berlin              180     ---      ---      9.3%
Landesbank BW                  225     ---      ---      8.9%
Maria Fiorini Ramirez          250      260     ---      9.1%
MET Capital Advisors           170     ---      ---      9.2%
MF Global                      200      215       25     9.1%
Mizuho Securities              125     ---      ---      9.2%
Moody’s Analytics              250      240       40     9.0%
Morgan Keegan & Co.            221     ---      ---      9.0%
Morgan Stanley & Co.           150     ---      ---      9.2%
National Bank Financial        210     ---      ---      9.1%
Natixis                        170     ---      ---      9.0%
Newedge                        160     ---        15     9.1%
Nomura Securities Intl.        235     ---      ---      9.1%
Nord/LB                        160      150       30     9.1%
OSK Group/DMG                  150     ---      ---      9.1%
Paragon Research               280     ---      ---      9.1%
Parthenon Group                297     ---      ---      9.2%
Pierpont Securities            260      275     ---      9.1%
PineBridge Investments         200     ---      ---      9.2%
PNC Bank                       160     ---        25     9.2%
Prestige Economics             150      170     ---      9.0%
Raiffeisenbank International   200      210     ---      9.1%
Raymond James                  120      135     ---      9.1%
RBC Capital Markets            160      175     ---      9.2%
RBS Securities                 150      160     ---      9.2%
Scotia Capital                 170      165     ---      9.2%
Societe Generale               230      250     ---      ---
Standard Chartered             210      220     ---      9.1%
State Street Global Markets    181      194       29     9.1%
Stone & McCarthy Research      125      135        0     9.0%
TD Securities                  210      200     ---      9.2%
Thomson Reuters/IFR            185      190       25     9.1%
UBS                            235      250     ---      9.0%
UniCredit Research             275     ---      ---      9.2%
Union Investment               196     ---      ---      9.3%
University of Maryland         120      130       20     9.1%
Wells Fargo & Co.              212     ---      ---      9.0%
WestLB AG                      190     ---      ---      9.2%
Westpac Banking Co.            220     ---      ---      9.3%
Wrightson ICAP                 185      200     ---      9.0%
==============================================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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