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Strong payrolls expected again in Feb.
Survey sees 206,000 growth in U.S. jobs
By Rex Nutting, MarketWatch
Last Update: 5:08 PM ET Mar 9, 2006
WASHINGTON (MarketWatch) -- All the signs point to strong job growth in February, economists surveyed by MarketWatch said.
The Labor Department will report on February nonfarm payrolls on Friday at 8:30 a.m. Eastern time.
Economists surveyed by MarketWatch are forecasting an average gain of 206,000 in payrolls and expect the unemployment rate to remain at 4.7%. Average hourly earnings should rise 0.3% and the average workweek should stay at 33.8 hours, the survey says.
The economy added 193,000 jobs in January, with payrolls boosted by unseasonably warm weather in much of the nation that kept construction workers and others who work out-of-doors on the job longer.
Most economists expect some payback in February, when the weather returned to more seasonable cold and wet conditions. But they say fundamental strength in the labor market probably offset any expected seasonally adjusted declines from the weather.
Financial markets will be paying close attention to the details of the report for hints about what the Federal Reserve will do about interest rates. See our complete coverage of the Fed.
"This report will play an important role in setting the tone at the March 27-28 [Federal Open Market Committee] meeting -- particularly since the Fed has recently been emphasizing its data-dependent stance on monetary policy," said Joseph LaVorgna, chief U.S. fixed income economist for Deutsche Bank.
A rate hike at the March meeting seems to be a foregone conclusion, but the decision in May could be influenced by the March and April payroll reports. The FOMC said in January that "possible increases in resource utilization" had the potential to add to inflationary pressures.
With the unemployment rate at a five-year low of 4.7%, the Fed is concerned that the tight labor markets could set off a spiral of wage and price increases.
The biggest evidence in favor of a strong payrolls report is the low level of jobless claims during the month. Initial jobless claims dropped to a new plateau just under 300,000 per week for seven straight weeks, while continuing claims fell to a five-year low.
Leading indicators, such as jobless claims, the manpower survey and the purchasing managers' indexes, point to payroll growth of as much as 300,000, said Drew Matus, an economist for Lehman Bros. But the weather effect will knock the gain back to about 250,000. he said.
Other economists say the payrolls report will look weak. "There will be a payback," said Jim O'Sullivan, U.S. economist for UBS, who's predicting growth of 125,000.
David Greenlaw, an economist for Morgan Stanley, is forecasting a gain of only 100,000 because of unseasonably bad weather in February. "A major blizzard battered the East Coast just as the survey week was about to begin," Greenlaw said.
A stronger storm with similar timing in January 1996 played havoc with the payroll figures then and Greenlaw expects a similar although smaller impact for this year's storm.
Others say the blizzard was a non-event for payrolls. It hit early in the survey week and was followed by very warm weather than melted the snow in days, which means very few workers would have been kept from work the whole week.
To be counted as off the payroll or unemployed, a worker would need to miss the entire week of work during the week of Feb. 12.
One place the East Coast storm could have an impact is on the average workweek, which could fall by a tenth of an hour to 33.7 hours, Matus said.
A reduced workweek could also boost average hourly earnings, because many workers get paid for a full week even if they miss some time on the clock.
Average hourly wages are up 3.3% in the past 12 months, the most in two years. But after adjusting for inflation, real hourly wages are down 0.7% in the past year.
Rex Nutting is Washington bureau chief of MarketWatch.
Strong payrolls expected again in Feb.
Survey sees 206,000 growth in U.S. jobs
By Rex Nutting, MarketWatch
Last Update: 5:08 PM ET Mar 9, 2006
WASHINGTON (MarketWatch) -- All the signs point to strong job growth in February, economists surveyed by MarketWatch said.
The Labor Department will report on February nonfarm payrolls on Friday at 8:30 a.m. Eastern time.
Economists surveyed by MarketWatch are forecasting an average gain of 206,000 in payrolls and expect the unemployment rate to remain at 4.7%. Average hourly earnings should rise 0.3% and the average workweek should stay at 33.8 hours, the survey says.
The economy added 193,000 jobs in January, with payrolls boosted by unseasonably warm weather in much of the nation that kept construction workers and others who work out-of-doors on the job longer.
Most economists expect some payback in February, when the weather returned to more seasonable cold and wet conditions. But they say fundamental strength in the labor market probably offset any expected seasonally adjusted declines from the weather.
Financial markets will be paying close attention to the details of the report for hints about what the Federal Reserve will do about interest rates. See our complete coverage of the Fed.
"This report will play an important role in setting the tone at the March 27-28 [Federal Open Market Committee] meeting -- particularly since the Fed has recently been emphasizing its data-dependent stance on monetary policy," said Joseph LaVorgna, chief U.S. fixed income economist for Deutsche Bank.
A rate hike at the March meeting seems to be a foregone conclusion, but the decision in May could be influenced by the March and April payroll reports. The FOMC said in January that "possible increases in resource utilization" had the potential to add to inflationary pressures.
With the unemployment rate at a five-year low of 4.7%, the Fed is concerned that the tight labor markets could set off a spiral of wage and price increases.
The biggest evidence in favor of a strong payrolls report is the low level of jobless claims during the month. Initial jobless claims dropped to a new plateau just under 300,000 per week for seven straight weeks, while continuing claims fell to a five-year low.
Leading indicators, such as jobless claims, the manpower survey and the purchasing managers' indexes, point to payroll growth of as much as 300,000, said Drew Matus, an economist for Lehman Bros. But the weather effect will knock the gain back to about 250,000. he said.
Other economists say the payrolls report will look weak. "There will be a payback," said Jim O'Sullivan, U.S. economist for UBS, who's predicting growth of 125,000.
David Greenlaw, an economist for Morgan Stanley, is forecasting a gain of only 100,000 because of unseasonably bad weather in February. "A major blizzard battered the East Coast just as the survey week was about to begin," Greenlaw said.
A stronger storm with similar timing in January 1996 played havoc with the payroll figures then and Greenlaw expects a similar although smaller impact for this year's storm.
Others say the blizzard was a non-event for payrolls. It hit early in the survey week and was followed by very warm weather than melted the snow in days, which means very few workers would have been kept from work the whole week.
To be counted as off the payroll or unemployed, a worker would need to miss the entire week of work during the week of Feb. 12.
One place the East Coast storm could have an impact is on the average workweek, which could fall by a tenth of an hour to 33.7 hours, Matus said.
A reduced workweek could also boost average hourly earnings, because many workers get paid for a full week even if they miss some time on the clock.
Average hourly wages are up 3.3% in the past 12 months, the most in two years. But after adjusting for inflation, real hourly wages are down 0.7% in the past year.
Rex Nutting is Washington bureau chief of MarketWatch.
posted by Jones Lang LaSalle NJ News Blog at 3:01 PM
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