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Job Growth Headed for Strongest Run in U.S. Since 2006

Employers probably took on more than 200,000 workers in February for a third straight month, indicating an improving labor market will support the U.S. expansion, economists said before a report today.

Payrolls increased by 210,000 after rising 243,000 in January, according to the median projection of 94 economists surveyed by Bloomberg News. Such a gain would cap the strongest six-month hiring stretch since 2006. The jobless rate probably held at an almost three-year low of 8.3 percent.

More jobs will bolster the wages that drive consumer spending, which accounts for about 70 percent of the economy. The latest pickup in employment may not be convincing enough for Federal Reserve Chairman Ben S. Bernanke, who last week said the labor market remains “far from normal” and repeated interest rates are likely to stay low at least through the end of 2014.

Job creation at this pace means the expansion is much more likely to handle any new headwinds,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The Fed is still cautious because economic growth has been disappointing.”

The Labor Department’s report is due at 8:30 a.m. in Washington. Payroll estimates in the Bloomberg survey ranged from increases of 125,000 to 275,000. The January gain was the biggest since last April, when employers took on 251,000 more workers.

The projected increase in February payrolls marks the best six-month stretch of job growth since the period ended June 2006, more than a year before the recession began.

Recent data showing the expansion will be sustained has also lifted share prices. The Standard & Poor’s 500 Index has climbed 8.6 percent this year through yesterday.

Company Payrolls

Companies are forecast to expand payrolls by 225,000, after a 257,000 gain in January that was also the biggest in nine months, according to the survey median. Factory payrolls are projected to rise by 24,000 after a 50,000 gain.

“There is hiring going on,” Richard Fearon, chief financial officer at Eaton Corp., said at a March 6 industrial conference in New York. The Cleveland-based maker of circuit breakers and truck transmissions will “definitely need more manpower to serve” growing demand for tractor-trailers and for the equipment used in construction and hydraulics, he said.

Since August, the unemployment rate has dropped 0.8 percentage point. It was last below 8.3 percent in January 2009, when 7.8 percent of the labor force was jobless.

Dismissals have also waned, a sign companies may be more confident about the economic outlook. Applications for jobless claims averaged 355,000 over the past four weeks, close to the lowest level in four years. Five months ago they averaged more than 400,000, Labor Department data show.

Income Gains

Payroll gains are translating into growing incomes, laying the groundwork for a pickup in household spending. Wages and salaries in the third and fourth quarters of 2011 grew a combined $197.3 billion, the most since the six months ended March 2007, according to revised Commerce Department figures last week.

Wage increases will help Americans weather gasoline prices that have increased by almost 50 cents this year through March 7, to $3.76 a gallon, according to data from AAA, the nation’s largest auto club.

Nonetheless, consumer confidence climbed to a four-year high last week, showing an improving labor market and rising stock prices are outweighing the negative effects of higher fuel costs.

Even with “positive developments” in the job market, Bernanke told lawmakers last week the “modest and uneven” expansion needs the support of monetary policy. The central bank said in January that economic conditions are likely to warrant low interest rates at least through late 2014.

Growth Pickup

The Commerce Department last week reported the economy grew at a 3 percent annual pace in the fourth quarter after a 1.8 percent gain in the prior three months.

“The unemployment rate remains elevated, long-term unemployment is still near record levels and the number of persons working part time for economic reasons is very high,” Bernanke said during a Feb. 29 testimony to Congress. Fed policy makers judge “that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives” for stable prices and maximum employment, he said.

The so-called underemployment rate, which includes part- time workers who’d prefer a full-time job and those who want work but have given up looking, was 15.1 percent in January.

A report from the Commerce Department at 8:30 a.m. may show the trade deficit widened to $49 billion in January, the biggest gap in seven months, according to economists surveyed.

                         Bloomberg Survey

================================================================
                           Nonfarm  Private Unemploy    Trade
                          Payrolls Payrolls     Rate  Balance
                            ,000’s   ,000’s        %   $ Blns
================================================================
Date of Release              03/09    03/09    03/09    03/09
Observation Period            Feb.     Feb.     Feb.     Jan.
----------------------------------------------------------------
Median                         210      225     8.3%    -49.0
Average                        212      227     8.3%    -48.9
High Forecast                  275      290     8.5%    -46.5
Low Forecast                   125      120     8.1%    -51.0
Number of Participants          94       49       89       79
Previous                       243      257     8.3%    -48.8
----------------------------------------------------------------
4CAST                          215      237     8.2%    -49.2
ABN Amro                       200      210     8.3%    -48.6
Action Economics               210      225     8.3%    -48.5
Aletti Gestielle               200     ---      8.2%    -48.5
Ameriprise Financial           225      235     8.4%    -49.0
Banca Aletti                   190      213     8.2%    -49.2
Banesto                        225     ---      ---     -49.5
Bank of Tokyo- Mitsubishi      205      220     8.2%     ---
Barclays Capital               225      240     8.2%    -48.2
BBVA                           200      220     8.3%    -48.2
BMO Capital Markets            210     ---      8.3%    -49.0
BNP Paribas                    225     ---      8.3%    -48.3
BofA Merrill Lynch             215      225     8.4%    -49.0
Briefing.com                   250      275     8.3%    -48.0
Capital Economics              220     ---      8.2%    -50.0
CIBC World Markets             230     ---      8.3%    -47.5
Citi                           190     ---      8.3%    -50.0
ClearView Economics            200      220     8.5%    -49.0
Comerica                       200     ---      8.3%    -50.0
Commerzbank AG                 250     ---      8.3%    -49.0
Credit Agricole CIB            200     ---      8.3%    -49.1
Credit Suisse                  235     ---      8.3%    -49.5
Daiwa Securities America       185     ---      8.3%    -48.0
Danske Bank                    220      230     8.2%     ---
DekaBank                       190     ---      8.3%    -48.0
Desjardins Group               215     ---      8.3%    -48.0
Deutsche Bank Securities       255      270     8.2%    -49.5
Deutsche Postbank AG           200     ---      8.3%    -48.5
DZ Bank                        220     ---      8.3%    -49.5
Exane                          200     ---      8.3%    -49.5
Fact & Opinion Economics       220      235     8.3%    -50.5
First Trust Advisors           230      245     8.2%    -48.4
FLAR                           208      223     ---      ---
FTN Financial                  235      220     8.2%    -49.5
Goldman, Sachs & Co.           200     ---      8.2%    -47.0
Helaba                         220     ---      8.3%    -48.5
Herrmann Forecasting           201      212     8.3%    -49.6
High Frequency Economics       240      250     8.2%    -50.0
HSBC Markets                   185      195     8.3%    -49.5
Hugh Johnson Advisors          130      120     8.4%    -50.0
IDEAglobal                     275      290     8.2%    -49.5
IHS Global Insight             220     ---      8.2%    -47.4
Informa Global Markets         245     ---      8.3%    -47.5
ING Financial Markets          240      260     8.1%    -48.7
Insight Economics              250     ---      8.4%     ---
Intesa Sanpaulo                210     ---      8.3%    -49.0
Iur Capital                    180     ---      8.4%     ---
J.P. Morgan Chase              220     ---      8.2%    -48.3
Janney Montgomery Scott        200      220     8.5%    -48.3
Jefferies & Co.                220      230     8.2%    -49.9
JH Cohn                        200     ---      ---      ---
John Hancock Financial         228      240     8.3%    -48.0
Landesbank Berlin              125     ---      8.5%    -48.5
Landesbank BW                  250     ---      8.2%    -48.0
Laurentian Bank                200      205     8.4%     ---
LCA Consultores                240     ---      ---      ---
Maria Fiorini Ramirez          210      220     ---      ---
MET Capital Advisors           240     ---      8.2%     ---
Mizuho Securities              175     ---      8.3%    -50.0
Moody’s Analytics              200     ---      8.4%    -48.1
Morgan Keegan & Co.            205     ---      8.2%    -49.6
Morgan Stanley & Co.           220     ---      8.3%    -49.3
National Bank Financial        170     ---      8.3%    -48.0
Natixis                        220     ---      8.2%    -48.0
Newedge                        205      220     8.2%     ---
Nomura Securities              210      230     8.2%    -47.2
Nord/LB                        175     ---      8.3%    -49.5
OSK Group/DMG                  208     ---      8.3%     ---
O’Sullivan                     180      200     8.3%    -49.5
Paragon Research               220     ---      8.3%     ---
Parthenon Group                207     ---      8.3%    -48.1
Pierpont Securities            220      235     8.3%    -48.6
PineBridge Investments         235      255     8.2%    -47.5
PNC Bank                       210      225     8.3%    -47.0
Prestige Economics             210      225     8.3%     ---
Raiffeisenbank International   235      250     8.4%    -49.0
Raymond James                  185      195     8.2%    -47.5
RBC Capital Markets            193      208     8.5%    -49.4
RBS Securities                 230      245     8.3%    -51.0
Scotia Capital                 220      230     8.2%    -48.5
SMBC Nikko Securities          250      270     8.3%    -50.0
Societe Generale               275      285     8.1%    -50.8
Standard & Poor’s              210      225     8.3%    -48.5
Standard Chartered             205      226     8.2%    -49.5
Stone & McCarthy Research      200      210     8.2%    -49.8
TD Securities                  190      210     8.4%    -49.0
UBS                            190      210     8.3%    -46.5
UniCredit Research             210     ---      8.3%    -48.5
Union Investment               211     ---      8.2%     ---
University of Maryland         180      195     8.3%    -49.6
Wells Fargo & Co.              201     ---      8.2%    -48.4
WestLB AG                      225     ---      8.3%    -49.5
Westpac Banking Co.            180     ---      8.4%    -50.0
Wrightson ICAP                 195      210     8.2%    -49.5
================================================================

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

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

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