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
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Nonfarm Private Unemploy Trade
Payrolls Payrolls Rate Balance
,000’s ,000’s % $ Blns
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Date of Release 03/09 03/09 03/09 03/09
Observation Period Feb. Feb. Feb. Jan.
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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
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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
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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