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Increases in U.S. Payrolls, Manufacturing Were Probably Sustained in March

The pickup in U.S. employment was probably sustained in March, and factory assembly lines kept humming, showing that a jump in fuel costs has yet to choke the expansion, economists said before reports today.

Payrolls increased by 190,000 workers last month after a 192,000 advance in February that was the biggest in nine months, according to the median forecast of 83 economists surveyed by Bloomberg News. Manufacturing may have expanded at about the same pace as in February, the strongest month in almost seven years.

Record exports and gains in business and consumer spending are prompting companies like Chrysler Group LLC and Kohl’s Corp. (KSS) 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 last month to signal they were unlikely to extend bond purchases beyond June.

“The improving trend in employment is a bright spot,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “The private sector is picking up its hiring. The economy is on a firmer footing, but not yet on a firm footing.”

The Labor Department’s jobs numbers are due at 8:30 a.m. in Washington. Bloomberg survey estimates ranged from payroll increases of 150,000 to 295,000.

Private payrolls are forecast to rise by 208,000 in March after a 222,000 gain, according to the survey median, the biggest back-to-back increase since 2006. Manufacturing payrolls are forecast to rise by 30,000.

Jobless Outlook

Unemployment probably held at 8.9 percent, the lowest level in almost two years, according to the survey median. The rate dropped by 0.9 percentage point over the prior three months, the biggest decline in such a time span since 1983.

The March jobs reading will likely be the first of the year that wasn’t skewed by weather. Winter storms constrained payrolls in January, prompting a February rebound when temperatures were closer to normal for the month.

A report from the Tempe, Arizona-based Institute for Supply Management at 10 a.m. will show the purchasers’ factory index fell to 61 last month from 61.4 in February, its 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 Demand

Auto sales, after climbing for six consecutive months, reached the highest level in more than a year in February. Demand at General Motors Co. (GM), Chrysler and Toyota Motor Corp. (TOYOF) exceeded analysts’ estimates.

Chrysler, aiming for its first net profit since emerging from bankruptcy in 2009, plans to hire 1,000 engineers and high- tech workers for its small and midsized vehicles. The Auburn Hills, Michigan-based company is also urging its dealers to hire more salesmen and service workers to help boost sales 32 percent this year.

“Hiring additional personnel in preparation for the spring market is essential for success in 2011,” Peter Grady, vice president of Chrysler’s network development and fleet, said in a memo to dealers last month.

Kohl’s said this week that it plans to open a new e- commerce distribution center in Edgewood, Maryland, in July and hire 1,200 workers over the next three years.

Fuel Costs

Oil prices that closed at $106.72 yesterday, the highest since September 2008, may keep climbing should Middle East political turmoil continue unabated, raising the risk that consumer spending will slow in coming months.

U.S. companies are also still trying to gauge the effects of the March 11 earthquake in Japan and the subsequent nuclear crisis on international supply chains. Toyota expects assembly interruptions that may affect North America plants.

The Fed, after its latest policy meeting March 15, pledged to continue its program of purchasing $600 billion of bonds by June, in order to “promote a stronger pace of economic recovery.” Policy makers 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 in the recovery. Construction spending, due at 10 a.m., fell 0.2 percent in February after a 0.7 percent decline the prior month, economists forecast the Commerce Department will report.

                         Bloomberg Survey

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

Date of Release              04/01    04/01    04/01    04/01
Observation Period           March    March    March    March
--------------------------------------------------------------
Median                         190      208     8.9%     61.0
Average                        196      214     8.9%     61.0
High Forecast                  295      315     9.1%     64.0
Low Forecast                   150      165     8.7%     59.0
Number of Participants          83       42       80       79
Previous                       192      222     8.9%     61.4
--------------------------------------------------------------
4CAST Ltd.                     215      240     8.9%     60.8
ABN Amro Inc.                  210      230     8.9%     61.0
Action Economics               185     ---      8.9%     60.0
Aletti Gestielle               190      205     8.9%     61.5
Ameriprise Financial           210      235     8.9%     59.8
Banesto                        220     ---      ---      61.1
Bank of Tokyo- Mitsubishi      170      187     8.8%     61.9
Bantleon Bank AG               180     ---      9.0%     61.3
Barclays Capital               175      190     8.9%     62.0
Bayerische Landesbank          180     ---      8.9%     61.2
BBVA                           195      220     8.9%     62.5
BMO Capital Markets            230     ---      8.9%     61.5
BNP Paribas                    180     ---      9.0%     61.0
BofA Merrill Lynch             160      185     9.0%     59.5
Briefing.com                   175      200     9.0%     59.0
Capital Economics              175     ---      8.9%     60.0
CIBC World Markets             230     ---      8.9%     59.5
Citi                           250      265     9.0%     59.0
ClearView Economics            200      230     9.0%     60.0
Commerzbank AG                 200     ---      8.9%     61.0
Credit Agricole CIB            180     ---      8.9%     62.0
Credit Suisse                  200     ---      8.9%     61.4
DekaBank                       180     ---      9.0%     61.5
Desjardins Group               155     ---      9.0%     62.0
Deutsche Bank Securities       200     ---      8.9%     60.0
Deutsche Postbank AG           190     ---      8.9%     60.5
Exane                          230     ---      9.0%     61.0
Fact & Opinion Economics       235     ---      8.9%     61.5
First Trust Advisors           165      185     8.8%     61.2
FTN Financial                  200      225     8.9%     61.0
Goldman, Sachs & Co.           175     ---      8.9%     60.0
Helaba                         200     ---      8.9%     60.0
High Frequency Economics       175      200     ---      ---
HSBC Markets                   175      190     8.9%     60.0
Hugh Johnson Advisors          180     ---      9.0%     62.0
IDEAglobal                     250      265     8.8%     63.0
IHS Global Insight             160      175     8.9%     61.6
Informa Global Markets         175     ---      8.9%     61.7
ING Financial Markets          170      185     8.9%     61.6
Intesa-SanPaulo                200     ---      8.9%     61.5
ITG Investment Research        185      200     ---      ---
J.P. Morgan Chase              185      200     8.9%     61.0
Janney Montgomery Scott        201      222     8.9%     59.8
Jefferies & Co.                240      260     8.8%     62.0
Landesbank Berlin              250     ---      9.0%     62.0
Landesbank BW                  280     ---      8.8%     62.0
Maria Fiorini Ramirez          225      240     8.9%     60.0
MET Capital Advisors           200     ---      8.9%     62.0
MF Global                      175      195     9.0%     61.5
Mizuho Securities              175     ---      8.9%     60.0
Moody’s Analytics              190      200     9.0%     60.7
Morgan Keegan & Co.            162     ---      8.9%     ---
Morgan Stanley & Co.           180     ---      9.0%     61.0
National Bank Financial        150     ---      9.0%     61.0
Natixis                        180     ---      8.9%     60.5
Newedge                        200      230     8.9%     61.6
Nomura Securities              225     ---      8.9%     61.6
Nord/LB                        180      210     8.9%     59.0
OSK Group/DMG                  190     ---      9.0%     60.6
Paragon Research               220     ---      9.0%     ---
Parthenon Group                246     ---      8.9%     60.5
Pierpont Securities            210      225     8.9%     61.8
PineBridge Investments         235     ---      8.9%     61.5
PNC Bank                       220      222     9.1%     62.5
Prestige Economics             165      180     8.9%     61.0
Raiffeisenbank International   185      210     8.9%     61.4
Raymond James                  165      190     8.9%     62.2
RBC Capital Markets            168      180     8.8%     62.7
RBS Securities Inc.            180      200     9.0%     61.0
Scotia Capital                 170     ---      8.9%     60.5
Societe Generale               295      315     8.7%     62.0
Standard Chartered             195      230     8.9%     64.0
State Street Global Markets    192      206     8.9%     60.4
Stone & McCarthy Research      150      165     8.8%     62.0
TD Securities                  200      210     9.0%     62.0
UBS                            205      225     8.8%     62.0
UniCredit Research             160     ---      9.1%     60.0
Union Investment               201     ---      8.8%     61.0
University of Maryland         163      183     8.9%     60.2
Wells Fargo & Co.              220     ---      8.8%     60.0
WestLB AG                      195     ---      8.9%     60.0
Westpac Banking Co.            160     ---      9.1%     59.0
Wrightson ICAP                 275      290     8.8%     60.5
==============================================================

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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

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