Payrolls Probably Rose as U.S. Employers Looked Past Budget Cuts

Automakers and construction companies are among those announcing plans to take on more staff, which will lead to gains in incomes that may help the world’s biggest economy weather federal cutbacks and higher taxes. Photographer Scott Eells/Bloomberg Close

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Automakers and construction companies are among those announcing plans to take on more staff, which will lead to gains in incomes that may help the world’s biggest economy weather federal cutbacks and higher taxes. Photographer Scott Eells/Bloomberg

Payrolls probably grew in February, a sign U.S. employers were undaunted by the budget impasse in Washington as sales rose, economists said before a report today.

An additional 165,000 workers were hired last month after a 157,000 increase in January, according to the median forecast of 90 economists surveyed by Bloomberg. The jobless rate held at 7.9 percent, the survey showed.

Automakers and construction companies are among those announcing plans to take on more staff, which will lead to gains in incomes that may help the world’s biggest economy weather federal cutbacks and higher taxes. Federal Reserve policy makers remain unsatisfied with the pace at which out-of-work Americans, now at 12.3 million, are finding employment, indicating they’ll keep adding stimulus to spur growth.

“The labor market is steady as she goes,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “Job growth is enough to keep the consumer moving ahead. These are modest gains, unsatisfying in terms of how much we need to claw back from the enormous hit we took during the recession, but they’re at least still in the right direction.”

Payroll estimates ranged from gains of 121,000 to 260,000 in the Bloomberg survey. The Labor Department will release the employment figures at 8:30 a.m. in Washington.

Private payrolls, which exclude government agencies from the count, rose by 173,000 in February after a 166,000 gain the prior month, the survey showed.

Forecasts for the unemployment rate ranged from 7.7 percent to 7.9 percent. Joblessness has been 7.8 percent or 7.9 percent since September.

‘Improving Gradually’

“Consistent with the moderate pace of economic growth, conditions in the labor market have been improving gradually,” Fed Chairman Ben S. Bernanke told lawmakers last week during his semiannual testimony on monetary policy. Central bank officials still want to see “substantial improvement in the outlook for the labor” and will thus continue to buy securities and keep interest rates low to stimulate the economy, he said.

The economy is creating jobs this year even with the fiscal constraints that started in January. Congress let the payroll tax funding Social Security revert to 6.2 percent from 4.2 percent, and boosted taxes on top income earners. The U.S. economy will also be tested by $85 billion in across-the-board budget cuts, known as sequestration, that began March 1 because lawmakers couldn’t agree on deficit reduction.

Shares Gains

Markets have also taken the effects of fiscal tightening in stride. The Standard & Poor’s 500 Index advanced 6.5 percent this year through last week, more than the MSCI All Country (MXWD) World Index’s 4.1 percent gain. The Dow Jones Industrial Average closed at a record-high on March 5, regaining losses resulting from the recession. It has continued climbing, closing at a new high of 14,329.49 yesterday.

A private report earlier this week showed businesses took on more workers than projected in February. Headcounts grew by 198,000 last month after a more-than-first estimated 215,000 addition in January, according to March 6 figures from the ADP Research Institute.

A recovery in house prices and a need to enlarge the supply of homes for sale has stirred construction activity. Home Depot Inc. (HD) said last month it plans to add more than 80,000 temporary employees ahead of its busiest season, about 14 percent more than a year ago, as the rebound spurs spending on remodeling and landscaping. Lowe’s Cos. said in January it would take on 45,000 seasonal workers, 13 percent more than a year earlier, and add 9,000 permanent employees.

Boosting Production

Chrysler Group LLC, the automaker majority owned by Fiat SpA (F), will invest about $374 million and add 1,250 positions at Indiana factories to boost output of eight- and nine-speed transmissions. Chief Executive Officer Sergio Marchionne disclosed the investment in February.

Deloitte LLP plans to boost its staff by 18,000 this year, Chief Executive Officer Joe Echevarria said during a Feb. 27 interview on “Bloomberg Surveillance.” The accounting firm is hiring to support long-term growth even with the political uncertainty from Washington, he said.

As federal government spending declines, “the private sector can more than step in if they’re incented to hire and grow,” he said.

                        Bloomberg Survey
================================================================
                           Nonfarm  Private     Manu Unemploy
                          Payrolls Payrolls Payrolls     Rate
                            ,000’s   ,000’s   ,000’s        %
================================================================
Date of Release              03/08    03/08    03/08    03/08
Observation Period            Feb.     Feb.     Feb.     Feb.
----------------------------------------------------------------
Median                         165      170        9     7.9%
Average                        166      175        8     7.9%
High Forecast                  260      235       18     8.0%
Low Forecast                   121      129       -3     7.7%
Number of Participants          90       55       26       85
Previous                       157      166        4     7.9%
----------------------------------------------------------------
4CAST                          200      205     ---      7.8%
ABN Amro                       150      160     ---      7.9%
Action Economics               155      165        5     7.9%
Ameriprise Financial           160      170       10     7.8%
Banca Aletti                   183      211        8     7.9%
Bank of the West               150      159        0     7.9%
Bank of Tokyo-Mitsubishi       195     ---      ---      7.8%
Banorte-IXE                    150     ---      ---      7.9%
Bantleon Bank AG               145     ---      ---      7.9%
Barclays                       150      155     ---      7.8%
Bayerische Landesbank          160     ---      ---      7.9%
BBVA                           152      161     ---      7.9%
BMO Capital Markets            180     ---      ---      7.8%
BNP Paribas                    160     ---      ---      7.9%
BofA Merrill Lynch             160      165     ---      7.8%
Capital Economics              175     ---      ---      7.9%
CIBC World Markets             158     ---      ---      7.9%
Citi                           150      150       10     7.8%
ClearView Economics            150      160        7     7.9%
CohnReznick                    130      150     ---      ---
Comerica                       165     ---         5     7.9%
Commerzbank AG                 165      175     ---      7.9%
Credit Agricole CIB            180     ---      ---      7.8%
Credit Suisse                  175      190     ---      7.8%
Daiwa Securities America       165     ---      ---      7.9%
Danske Bank A/S                165      175       -3     7.9%
DekaBank                       180     ---      ---      7.8%
Desjardins Group               180     ---      ---      7.9%
Deutsche Bank Securities       180      190     ---      7.7%
Deutsche Postbank AG           160     ---      ---      7.9%
First Trust Advisors           210      217       10     7.8%
FTN Financial                  130      140     ---      7.9%
Goldman, Sachs & Co.           150     ---      ---      7.9%
Hammer Partners SA             150     ---      ---      7.9%
Helaba                         150     ---      ---      7.9%
Herrmann Forecasting           181      176       13     7.8%
High Frequency Economics       130     ---      ---      7.8%
HSBC Markets                   179      182        9     7.9%
Hugh Johnson Advisors          168      167       10     7.8%
IDEAglobal                     175      185       10     7.9%
IHS Global Insight             145     ---      ---      7.9%
Informa Global Markets         145     ---         5     7.8%
ING Financial Markets          140      140        8     7.8%
Intesa Sanpaolo                185     ---      ---      7.8%
J.P. Morgan Chase              165      170       10     7.9%
Janney Montgomery Scott        171      181        8     7.8%
Jefferies                      175      182       10     7.9%
John Hancock Financial         172     ---      ---      7.9%
Landesbank Berlin              150     ---      ---      7.9%
Landesbank BW                  190     ---      ---      7.9%
LinkUp                         260     ---      ---      ---
Lloyds Tsb Bank                175      180     ---      7.8%
Maria Fiorini Ramirez          155      165     ---      ---
Market Securities              151     ---      ---      7.8%
MET Capital Advisors           185      200     ---      7.9%
Modal Asset                    180      187     ---      ---
Moody’s Analytics              188      198        5     7.8%
Morgan Stanley & Co.           135      140       10     7.9%
National Bank Financial        150     ---      ---      7.9%
Natixis                        140     ---      ---      7.9%
Nomura Securities              165      175        5     7.8%
Nord/LB                        160      170       10     7.8%
OSK Group/DMG                  170     ---      ---      7.8%
Pantheon Macroeconomic         220      230     ---      7.9%
Paragon Research               205     ---      ---      7.7%
Pierpont Securities            145      145     ---      7.9%
PineBridge Investments         125     ---      ---      7.8%
PNC Bank                       200      205       10     7.8%
Prestige Economics             175      185     ---      7.8%
Raiffeisenbank International   180      190     ---      7.8%
Raymond James                  135      150     ---      7.9%
RBC Capital Markets            145      155     ---      7.8%
RBS Securities                 160      165     ---      7.9%
Regions Financial              182      190        8     7.8%
Renaissance Macro Research     145      150     ---      7.9%
Santander                      200      210     ---      7.9%
Scotiabank                     175     ---      ---      7.9%
SMBC Nikko Securities          150      170     ---      7.8%
Societe Generale               225      235     ---      7.7%
Southbay Research              185      190     ---      ---
Southern Polytechnic State     121      129     ---      8.0%
Standard Chartered Bank        145      156     ---      7.9%
Stone & McCarthy Research      150      155        5     7.8%
TD Securities                  175      185     ---      7.8%
UBS                            190      200     ---      7.7%
UniCredit Research             175     ---      ---      7.9%
University of Maryland         156      166       18     7.9%
Wells Fargo & Co.              191     ---      ---      7.8%
Westpac Banking Co.            130     ---      ---      7.9%
Wrightson ICAP                 160      170     ---      7.8%
================================================================

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 at cwellisz@bloomberg.net

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