Employment in U.S. Probably Accelerated on Manufacturing, Better Weather
Payroll gains in the U.S. probably accelerated in February, buoyed by more seasonable temperatures and a pickup in manufacturing, economists said before reports this week.
Employment increased by 190,000 workers this month, the most since May 2010, after a 36,000 gain in January, when winter storms depressed the count, according to the median forecast of 59 economists surveyed by Bloomberg News ahead of Labor Department data on March 4. The report may also show the jobless rate increased to 9.1 percent from 9 percent.
Business spending on new equipment and gains in exports explain why companies like Intel Corp. are investing in new factories and hiring. Nonetheless, Federal Reserve Chairman Ben S. Bernanke in testimony before Congress this week may reiterate that he is dissatisfied with the pace of expansion and the amount of time it’s taking to bring down unemployment.
Payrolls are “going to be distorted by weather, so it’s going to be important to average out the January and February numbers,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “We’re slowly moving in the right direction, but we’re not improving as quickly as we would like.”
Nationwide, temperatures during the week of the February employment survey were near normal, except for the central and southern Great Plains, according to National Weather Service. In contrast, economists said a storm that spread from the Midwest and the South to New England during the prior month’s survey week likely depressed January numbers as businesses temporarily closed.
Weather Influence
Moody’s Sweet estimated the bad weather reduced January payrolls by about 100,000 workers, “so we should get those jobs back in February.”
The projected increase in the jobless rate would mean it has been 9 percent or higher for 22 consecutive months, the longest stretch at such elevated levels since monthly records began in 1948. At the same time, the rate has dropped 0.8 percentage point over the past two months, the biggest decrease in such a short period since 1958.
Bernanke will deliver the central bank’s semiannual report on monetary policy before the Senate Banking Committee on March 1. A day later, he will testify before the House Financial Services Committee.
Bernanke’s Concern
In an appearance before the same committee on Feb. 9, Bernanke told legislators that while the declines in the jobless rate in December and January “do provide some grounds for optimism,” he cautioned that “with output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level.”
President Barack Obama last week told the first meeting of his panel of outside economic advisers that the U.S. must deal with stubbornly high unemployment even as the recovery is well under way.
Intel, the world’s largest chipmaker, this month announced plans to build a $5 billion microprocessor plant in Chandler, Arizona, and hire 4,000 employees in the U.S. this year.
Factories remain a bulwark to the expansion. The Tempe, Arizona-based Institute for Supply Management’s manufacturing index, due March 1, held at 60.8 in February, the highest level since August 2005, economists forecast in the Bloomberg survey. Readings greater than 50 signal growth.
The jobs report is projected to show factories boosted staff by 25,000 workers this month after a 49,000 January gain that was the biggest since August 1998, the survey showed.
Factory Orders
Orders to U.S. factories probably rose 2 percent last month, the most since September, economists said ahead of a March 4 report from the Commerce Department.
“2010 was a strong recovery year across the board and 2011 is shaping up to be even better for our semiconductor, service and solar businesses,” Michael Splinter, chief executive officer of Applied Materials Inc., said in a teleconference with analysts on Feb. 24.
Shares of manufacturers since June 30, 2010, have outperformed the broader market. The Standard & Poor’s Machinery Index has increased 52 percent, compared with a 28 percent gain in the Standard & Poor’s 500 Index.
Service industries, which make up about 90 percent of the economy and include financial firms, retailers and business consultants, also are starting to pick up. ISM’s non- manufacturing gauge was at 59.4 in February for a second month, the highest reading in more than five years, economists projected the March 3 report will show.
Consumer Slowdown
A Commerce Department report tomorrow may show household purchases, which account for about 70 percent of the economy, slowed at the beginning of the year. Personal spending rose 0.4 percent in January after a 0.7 percent gain the prior month, according to the Bloomberg survey median. Much of the increase will reflect the rising cost of food and fuel, economists said.
“The big thing for consumers now is: ‘Wow, I sure did spend a lot of money to fill up the car, and then I went to the grocery store and spent a few more dollars than I expected,’” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina.
Bloomberg Survey
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Release Period Prior Median
Indicator Date Value Forecast
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Pers Inc MOM% 2/28 Jan. 0.4% 0.4%
Pers Spend MOM% 2/28 Jan. 0.7% 0.4%
Core PCE Prices YOY% 2/28 Jan. 0.7% 0.8%
Chicago PM Index 2/28 Feb. 68.8 67.5
Pending Homes MOM% 2/28 Jan. 2.0% -2.3%
Construct Spending MOM% 3/1 Jan. -2.5% -0.5%
ISM Manu Index 3/1 Feb. 60.8 60.8
ISM NonManu Index 3/3 Feb. 59.4 59.4
Nonfarm Payrolls ,000’s 3/4 Feb. 36 190
Private Payrolls ,000’s 3/4 Feb. 50 200
Manu Payrolls ,000’s 3/4 Feb. 49 25
Unemploy Rate % 3/4 Feb. 9.0% 9.1%
Hourly Earnings MOM% 3/4 Feb. 0.4% 0.2%
Factory Orders MOM% 3/4 Jan. 0.2% 2.0%
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source: bloomberg.com
