Gains in Payrolls Probably Accelerated, Showing U.S. Job Market Improving

Employment probably picked up in March and factory assembly lines kept humming, showing that the jump in fuel costs has yet to hamper the U.S. expansion, economists said before reports this week.

Payrolls increased by 195,000 workers this month, the most since May, after a 192,000 advance in February, according to the median forecast of 62 economists surveyed by Bloomberg News ahead of Labor Department data on April 1. A survey of purchasing managers the same day may show that manufacturing grew at close to the fastest pace in seven years.

Record exports, along with gains in business and consumer spending, are prompting such companies as General Motors Co. (GM) to boost staff, helping the U.S. weather the highest energy prices in more than two years. The improving economy encouraged Federal Reserve policy makers this month to signal that they are unlikely to expand bond purchases once the current program ends in June.

“We’re gathering strength as we move along,” said Kurt Karl, chief economist at Swiss Re in New York. “Job gains have moved up.” Nonetheless, he said, “given the depth of the downturn, this is a pretty moderate recovery.”

The employment report may also show that the jobless rate held at 8.9 percent in March. It has fallen by 0.9 percentage point over the last three months, the biggest decline in such a time span since 1983.

Private payrolls are forecast to rise by 222,000 in February for a second month, according to the survey median, the biggest back-to-back gain since 2006. Manufacturing payrolls are forecast to rise by 33,000, also matching the February increase.

Factory Rebound

A report from the Institute for Supply Management that also comes on April 1 will show that the purchasers’ factory index fell to 61 this month from 61.4 in February, the highest level since May 2004. The gauge climbed over 50, signaling growth, in August 2009, two months after the recession ended.

The manufacturing industries that account for 11 percent of the economy are likely to remain at the forefront of the recovery as businesses replenish inventories, the auto industry rebounds and China and other emerging markets boost imports of U.S.-made goods.

Auto sales, after climbing for six consecutive months, reached the highest level in more than a year in February. Demand at General Motors, Toyota Motor Corp. (TOYOF) and Ford Motor Co. (F) last month exceeded analysts’ estimates as industrywide sales rose to a 13.38 million annual rate, the most in 18 months.

GM is among companies taking on more staff to meet increased demand. The Detroit-based company will recall the last of its laid-off workers by September, United Auto Workers Vice President Joe Ashton said last week.

‘Back to Work’

“We only have about 2,000 people now laid off and those people will all be back to work in September,” Ashton, who handles negotiations with GM, told union workers at the UAW’s Special Convention on Collective Bargaining in Detroit.

Factory orders rose 0.3 percent in February after a 3.1 percent gain the previous month, economists forecast that the Commerce Department will report on March 31.

Shares of manufacturers have outperformed the broader market this year. The Standard & Poor’s Machinery Index has increased 7.6 percent, compared with a 4.5 percent gain in the S&P 500 Index.

A report from the Commerce Department on April 28 may show consumer spending, which accounts for about 70 percent of the economy, rose 0.5 percent in February after a 0.2 percent gain the prior month, according to economists’ forecasts. Personal income rose 0.4 percent, according to the forecasts.

Fed Policy

After its most recent policy meeting on March 15, the Fed pledged to continue its program of purchasing $600 billion of bonds by June in order to “promote a stronger pace of economic recovery.” They also said the economy was on “firmer footing” and acknowledged a rise in commodity prices, signaling deflation risk had diminished and they were unlikely to expand the bond purchase plan.

The housing industry that led the economy into recession in December 2007 remains a weak link. The S&P/Case-Shiller home price index of 20 major cities, due March 29, may show that values fell 3.2 percent in January from a year earlier, according to the survey median. That would be the biggest 12- month drop since November 2009.

An index of pending home sales, which measures contract signings for existing houses, was unchanged in February after dropping 2.8 percent the prior month, according the economists’ forecasts before the March 28 report from the National Association of Realtors.

Finally, the Conference Board’s report on consumer confidence may show that its index fell to 65 this month from 70.4 in February, according to economists’ estimates before the March 29 report. The highest gasoline prices since October 2008 are raising concern over economic prospects.

                        Bloomberg Survey

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                        Release    Period    Prior     Median
Indicator                 Date               Value    Forecast
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Pers Inc MOM%             3/28      Feb.      1.0%      0.4%
Pers Spend MOM%           3/28      Feb.      0.2%      0.5%
PCE Deflator YOY%         3/28      Feb.      1.2%      1.6%
Core PCE Prices MOM%      3/28      Feb.      0.1%      0.2%
Core PCE Prices YOY%      3/28      Feb.      0.8%      0.9%
Pending Homes MOM%        3/28      Feb.     -2.8%      0.0%
Case Shiller Monthly MO   3/29      Jan.     -0.4%     -0.5%
Case Shiller Monthly YO   3/29      Jan.     -2.4%     -3.2%
Case Shiller Monthly In   3/29      Jan.     142.4     141.8
Consumer Conf Index       3/29     March      70.4      65.0
ADP Payroll ,000’s        3/30     March      217       208
Initial Claims ,000’s     3/31     26-Mar     382       380
Cont. Claims ,000’s       3/31     19-Mar     3721      3705
BCCI                      3/31     27-Mar     -49       n/a
Chicago PM Index          3/31     March      71.2      69.0
NAPM Milwaukee Index      3/31     March      63.0      63.0
Factory Orders MOM%       3/31      Feb.      3.1%      0.3%
Nonfarm Payrolls ,000’s   4/1      March      192       195
Private Payrolls ,000’s   4/1      March      222       222
Manu Payrolls ,000’s      4/1      March       33        33
Unemploy Rate %           4/1      March      8.9%      8.9%
Hourly Earnings MOM%      4/1      March      0.0%      0.2%
Hourly Earnings YOY%      4/1      March      1.7%      1.9%
Avg Weekly Hours          4/1      March      34.2      34.3
Construct Spending MOM%   4/1       Feb.     -0.7%      0.0%
ISM Manu Index            4/1      March      61.4      61.0
ISM Prices Index          4/1      March      82.0      82.0
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To contact the reporter on this story: Robert Willis in Washington at bwillis@bloomberg.net

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

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